Saudi Arabia whines US has too much control over world’s oil

The Organization of Petroleum Exporting Countries (OPEC) has asked the U.S. to stop producing so much oil, according to a report Thursday.

OPEC’s report blames the U.S. in particular because hydraulic fracturing, or fracking, has greatly increased American oil production. The new production has led a lengthy period of very low oil prices. OPEC claims raising global oil prices will “require the collective efforts of all oil producers” and should be done “not only for the benefit of the individual countries, but also for the general prosperity of the world economy.”

New American oil production is undermining OPEC’s efforts to keep global prices between $50 and $60 per barrel, with current prices hovering around $47 a barrel.

“I think [OPEC] are now acutely aware that they don’t have the kind of influence they used to have 10 years ago, and that shale is now the swing producer in the market,” Tom Pugh, commodities economist at Capital Economics, told CNN Money.

As U.S. oil production continues increasing, OPEC oil gets edged out of the lucrative American oil market. America imported about 60 percent of its oil in 2007, but by 2014, the U.S. only imported 27 percent of its oil — that’s the lowest level since 1985, according to government data. The rising oil production has reduced demand for Saudi oil abroad too, keeping prices low.

The U.S. Energy Information Administration expects oil production to top 9 million barrels a day in 2017. The U.S. surpassed both Saudi Arabia and Russia in 2015 as the world’s largest and fastest-growing producer of oil.

OPEC de-facto leader, Saudi Arabia, is increasingly unable to control the global oil supply because of rising energy production in the U.S., Russia and Iran.

“Saudi Arabia is under extraordinary pressure both internally and externally,” Dr. Jean-Marc Rickli, a risk analyst at the Geneva Centre for Security Policy, told The Wall Street Journal.

The world’s biggest crude exporter is conceding ground to enact a steep oil production cut in order to prop up the low global price of oil, causing the Kingdom to rapidly lose market share and influence over other OPEC members.

The Saudis convinced OPEC to cut production to raise prices in November, but OPEC countries can’t cope with low crude prices and already appear to be cheating to balance their national budgets. Such cheating keeps oil from rising, further weakening Saudi control over OPEC.

Though Saudi Arabia can likely handle cheap oil better than other OPEC countries, it is expecting a budget deficit of $140 billion— roughly 20 percent of the country’s economy. The fiscal outlook for the country looks so dire when compared to 2013’s surplus of $48 billion, that the International Monetary Fund warned it could go through its fiscal reserves within five years. Saudi oil export revenues dropped 46 percent in just a year and the country is selling bonds for the first time since 2007.

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This article originally appeared in The Daily Caller

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About the Author: Andrew Follett

Andrew Follett covers energy and the environment for the Daily Caller.

  • Deplorable Gus

    OPEC should have been treated like the internationally illegal racket it is from when it was first formed. For decades it has, through criminal conspiracy, forced high-priced oil on the economies of the world. Now they are crying poverty and claim that higher oil prices will help economies around the world, as if they actually believe they can make people around the world to believe that higher oil prices will benefit them. Sorry, Saudi Arabia, Kuwait, Venezuela et al, nobody’s buying that BS, and we will actually enjoy watching you “suffer” in your billionaire mansions while your people rebel over having to give up the government oil-subsidized lives they have lived for years. Pass the popcorn!

  • J T

    Those Saudis can eat sht and die, let their economy go to hell.

  • Pam Dunn

    I recall OPEC putting the squeeze on the USA back during the days of Carter the moron. Screw them.

  • dje3

    Let me get this straight. When the Saudi oil fields were explored England, France and the US all were there and all bid for oil rights. The oil rights were SOLD in perpetuity on a percentage of delivery basis.

    The Saudis (and just about everyone else that sold their oil rights to those foreign firms) waited until oil was flowing and they had ability and resources to drill and harvest for themselves, then they SIEZED all oil rights and threw all the OWNERS of oil rights our of their nation. They STOLE the oil back in other words. ( look it up, it is considered good for Muslims to lie to infidels and to cheat them).

    They also threw all the people that were not “indigenous” to their countries out and told them to go to ….you got it…Palestine. They wanted a war between those people and Israel and for the Jews to be decimated. That isn’t going to happen is it?

    Now they say that WE have too much control on oil values? Yeah, right. I don’t want to hear about it.
    The reason that radical Islam exists is three fold, 1. the financial support of oil funds and 2. the lack of financial support to those in need in their own countries 3. The fact that religious leader control the people and governments overall!

    The sheiks take all the profit and then tell us that WE have too much control? Give me a break!

  • wally12

    The Saudis and other nations that have depended on controlled oil production and price control to finance their economies while making those countries that had insufficient reserves to bow down to their wishes are now facing what the US and other nations have had to face by being noncompetitive. Now the shoe is on the other foot. That is a good thing in one respect. The US is now becoming more competitive since we have a proven reserve for many years and thanks to privately own fracking and the drilling on private lands. No thanks to Obama who did everything in his power to keep fuel prices as high as possible to make his dream plan of destroying the fossil fuel industry and promote green energies by keeping fuel costs high. Yet, when fracking became viable and the cost of fuel went down, Obama readily claimed that he did it. I remember him stating that “You didn’t do it” government did it for you.

    What is unknown to me is there a point of limiting the US oil production at some level that doesn’t result in a physical war of nations. The US currently imports 27% of its oil. Is that by design to completely knock out the competition or is it a balance point to help Saudi Arabia to keep its country from bankruptcy and a possible Middle East war where the citizens revolt? If there is someone who can shed light on this please comment.