industryterm:oil tankers


  • Oman attack: Iran is the immediate, but unlikely, suspect - Iran - Haaretz.com

    Oman attack: Iran is the immediate, but unlikely, suspect
    U.S. officials rushed to point to Tehran, but somehow the world’s leading intelligence services failed to discover who is actually behind the strike. And even if they knew, what could be done without risking all-out war?
    Zvi Bar’el | Jun. 14, 2019 | 8:36 AM | 3
    https://www.haaretz.com/middle-east-news/iran/.premium-oman-attack-iran-is-the-immediate-but-unlikely-suspect-1.7368134


    A unnamed senior U.S. Defense Department official was quick to tell CBS that Iran was “apparently” behind the Thursday attack on two oil tankers in the Gulf of Oman, followed by State Secretary Mike Pompeo who later told reported that it was his government’s assessment. There’s nothing new about that, but neither is it a decisive proof.

    Who, then, struck the tankers? Whom does this strike serve and what can be done against such attacks?

    In all previous attacks in the Gulf in recent weeks Iran was naturally taken to be the immediate suspect. After all, Iran had threatened that if it could now sell its oil in the Gulf, other countries would not be able to ship oil through it; Tehran threatened to block the Strait of Hormuz, and in any case it’s in the sights of the United States, Saudi Arabia and Israel. But this explanation is too easy.

    The Iranian regime is in the thrones of a major diplomatic struggle to persuade Europe and its allies, Russia and China, not to take the path of pulling out of the 2015 nuclear agreement. At the same time, Iran is sure that the United States is only looking for an excuse to attack it. Any violent initiative on Tehran’s part could only make things worse and bring it close to a military conflict, which it must avoid.

    Iran has announced it would scale back its commitments under the nuclear deal by expanding its low-level uranium enrichment and not transferring the remainder of its enriched uranium and heavy water to another country, as the agreement requires. The International Atomic Energy Agency’s reports reveal that it has indeed stepped up enrichment, but not in a way that could support a military nuclear program.

    It seems that alongside its diplomatic efforts, Iran prefers to threaten to harm the nuclear deal itself, responding to Washington with the same token, rather than escalate the situation to a military clash.

    Other possible suspects are the Iran-backed Houthi rebels in Yemen, who continue to pound Saudi targets with medium-range missiles, as was the case last week with strikes on the Abha and Jizan airports, near the Yemeni border, which wounded 26 people. The Houthis have also fired missiles at Riyadh and hit targets in the Gulf. In response, Saudi Arabia launched a massive missile strike on Houthi-controlled areas in northern Yemen.

    The strike on the oil tankers may have been a response to the response, but if this is the case, it goes against Iran’s policy, which seeks to neutralize any pretexts for a military clash in the Gulf. The question, therefore, is whether Iran has full control over all the actions the Houthis take, and whether the aid it gives them commits them fully to its policies, or whether they see assaults on Saudi targets as a separate, local battle, cut off from Iran’s considerations.

    The Houthis have claimed responsibility for some of their actions in Saudi territory in the past, and at times even took the trouble of explaining the reasons behind this assault or the other. But not this time.

    Yemen also hosts large Al-Qaida cells and Islamic State outposts, with both groups having a running account with Saudi Arabia and apparently the capabilities to carry out strikes on vessels moving through the Gulf.

    In the absence of confirmed and reliable information on the source of the fire, we may meanwhile discount the possibility of a Saudi or American provocation at which Iran has hinted, but such things have happened before. However, we may also wonder why some of the most sophisticated intelligence services in the world are having so much trouble discovering who actually carried out these attacks.

    Thwarting such attacks with no precise intelligence is an almost impossible task, but even if the identity of those responsible for it is known, the question of how to respond to the threat would still arise.

    If it turns out that Iran initiated or even carried out these attacks, American and Saudi military forces could attack its Revolutionary Guards’ marine bases along the Gulf coast, block Iranian shipping in the Gulf and persuade European countries to withdraw from the nuclear deal, claiming that continuing relations with Iran would mean supporting terrorism in general, and maritime terrorism in particular.

    The concern is that such a military response would lead Iran to escalate its own and openly strike American and Saudi targets in the name of self-defense and protecting its sovereignty. In that case, a large-scale war would be inevitable. But there’s no certainty that U.S. President Donald Trump, who wants to extricate his forces from military involvement in the Middle East, truly seeks such a conflict, which could suck more and more American forces into this sensitive arena.

    An escape route from this scenario would require intensive mediation efforts between Iran and the United States, but therein lies one major difficulty – finding an authoritative mediator that could pressure both parties. Russia or China are not suitable candidates, and ties between Washington and the European Union are acrimonious.

    It seems that all sides would be satisfied if they could place responsibility for the attacks on the Houthis or other terror groups. That is not to say that the United States or Saudi Arabia have any magic solutions when it comes to the Houthis; far from it. The war in Yemen has been going on for five years now with no military resolution, and increased bombardment of concentrations of Houthi forces could only expand their efforts to show their strength. But the United States would pay none of the diplomatic or military price for assaults on the Houthis it would for a forceful violent response against Iran itself.

    If sporadic, small-scale attacks raise such complex dilemmas, one can perhaps dream of an all-out war with Iran, but it is enough to look at the chaos in Iraq and Afghanistan to grow extremely cautious of the trajectory in which such dreams become a nightmare that lasts for decades.❞
    #Oman #Iran
    https://seenthis.net/messages/786937

    • UPDATE 1-"Flying objects" damaged Japanese tanker during attack in Gulf of Oman
      Junko Fujita – June 14, 2019
      (Adds comments from company president)
      By Junko Fujita
      https://www.reuters.com/article/mideast-tanker-japan-damage/update-1-flying-objects-damaged-japanese-tanker-during-attack-in-gulf-of-om

      TOKYO, June 14 (Reuters) - Two “flying objects” damaged a Japanese tanker owned by Kokuka Sangyo Co in an attack on Thursday in the Gulf of Oman, but there was no damage to the cargo of methanol, the company president said on Friday.

      The Kokuka Courageous is now sailing toward the port of Khor Fakkan in the United Arab Emirates, with the crew having returned to the ship after evacuating because of the incident, Kokuka President Yutaka Katada told a press conference. It was being escorted by the U.S. Navy, he said.

      “The crew told us something came flying at the ship, and they found a hole,” Katada said. “Then some crew witnessed the second shot.”

      Katada said there was no possibility that the ship, carrying 25,000 tons of methanol, was hit by a torpedo.

      The United States has blamed Iran for attacking the Kokuka Courageous and another tanker, the Norwegian-owned Front Altair, on Thursday, but Tehran has denied the allegations.

      The ship’s crew saw an Iranian military ship in the vicinity on Thursday night Japan time, Katada said.

      Katada said he did not believe Kokuka Courageous was targetted because it was owned by a Japanese firm. The tanker is registered in Panama and was flying a Panamanian flag, he said.

      “Unless very carefully examined, it would be hard to tell the tanker was operated or owned by Japanese,” he said. (...)


  • Pour John Bolton, ce sont des “ mines iraniennes ” qui ont sauvagement attaqué les navires à l’ancre devant Fujairah. À son habitude, sans la moindre preuve…

    Top U.S. security adviser: Iranian mines likely caused UAE tanker blasts - Reuters
    https://www.reuters.com/article/us-usa-emirates-bolton-idUSKCN1SZ0JO


    A damaged Andrea Victory ship is seen off the Port of Fujairah, United Arab Emirates, May 13, 2019.
    REUTERS/Satish Kumar

    U.S. National Security Adviser John Bolton said on Wednesday that naval mines “almost certainly from Iran” were used to attack oil tankers off the United Arab Emirates this month, and warned Tehran against conducting new operations.
    […]
    I think it is clear these (tanker attacks) were naval mines almost certainly from Iran,” Bolton said without providing evidence. “There is no doubt in anybody’s mind in Washington who is responsible for this and I think it’s important that the leadership in Iran know that we know.

    He declined to comment on the specifics of the investigation into the attacks in which the United States, France, Norway and Saudi Arabia are taking part, but said those other countries and ship owners involved could do so.

    #whithout_providing_any_evidence


  • U.S. envoy urges response “ short of war ” to Gulf tankers attack - Energy & Oil - Reuters
    https://af.reuters.com/article/energyOilNews/idAFL5N22Q22D

    The U.S. ambassador to Saudi Arabia said Washington should take what he called “reasonable responses short of war” after it had determined who was behind attacks on oil tankers off the coast of the United Arab Emirates.

    Iran was a prime suspect in the sabotage on Sunday although Washington had no conclusive proof, a U.S. official familiar with American intelligence said on Monday. Iran has denied involvement.

    We need to do a thorough investigation to understand what happened, why it happened, and then come up with reasonable responses short of war,” Ambassador John Abizaid told reporters in the Saudi capital Riyadh in remarks published on Tuesday.

    It’s not in (Iran’s) interest, it’s not in our interest, it’s not in Saudi Arabia’s interest to have a conflict.
    […]
    COOL HEADS MUST PREVAIL
    Newspapers in the UAE, which are heavily controlled by the government, ran editorials urging caution in responding to the attack, which risks undermining the Gulf Arab state’s image as a regional bastion of stability and security.

    While further details are yet to emerge about this worrying incident, cool heads must prevail, and proper measures should be taken to ensure that this situation does not spin out of control,” wrote the editorial board of Abu Dhabi-based The National.

    Gulf News, a state-linked Dubai daily, said “rogue actors must be brought to book”.

    Saudi Arabia’s energy minister said on Monday that the attack aimed to undermine security of global crude supplies.


  • Beware ! Les hordes asiatiques vont déferler sur l’Occident !
    Il s’agit de produits intermédiaires (diesel) raffinés en Chine.

    Armada of Giant New Tankers Lines Up to Ship Diesel Out of Asia - Bloomberg
    https://www.bloomberg.com/news/articles/2019-01-24/armada-of-giant-new-tankers-lines-up-to-ship-diesel-out-of-asia


    Photographer : Tim Rue/Bloomberg

    • Maintenance season in Europe seen pulling cargoes West
    • New China refineries, weak local demand seen driving shipments

    A fleet of giant newly built oil tankers is gearing up to ship diesel out of East Asia.

    Five very large crude carriers, which typically carry about 2 million barrels of oil each, are currently positioned in the seas off China’s eastern and southern coasts, according to shipping intelligence and tracking company Kpler. Two more newbuilds are set to swell that fleet shortly. If all were fully loaded, they would haul a total approaching what is currently held in independent storage in Europe’s key trading hub of the Amsterdam, Rotterdam and Antwerp ports.

    It’s a large volume coming at once,” said Olivier Jakob, director at Petromatrix GmbH in Zug, Switzerland.

    China is boosting output, with more refinery capacity coming online, while weak local demand for middle distillates is helping to push products west, said Jakob. The start of refinery maintenance season in Europe also stoking Western demand for the fuel. China’s first round of export quotas also signaled an increase in diesel exports at the start of the year, while independent gasoil/diesel stocks in ARA are at their lowest seasonally since 2014.

    Three of the seven VLCCs highlighted by Kpler — the San Ramon Voyager, Ascona and Olympic Laurel — have already taken on board a combined 3.5 million barrels of diesel, according to a Bloomberg calculation from Kpler data, but are not yet fully loaded. Of the remaining four, one is currently loading, one is en route to Singapore where it may take on product, and two have yet to fully leave their construction yards.

    We expect the majority of these cargoes to head west around the Cape of Good Hope,” said Eli Powell, a Kpler analyst. Discharging is likely in northwest Europe, with possible partial discharges in West Africa.

    European demand conditions are quite favorable,” said Harry Tchilinguirian, global head of commodity markets strategy at BNP Paribas in London. “It would make sense to try to move a lot of volume into Europe in short order to meet that demand.

    The surge in Asian exports mirrors an increase in shipments of oil products, much of it diesel, from India and the Middle East into Europe in recent weeks. January’s monthly arrivals from India are set to hit their highest since at least 2017, and shipments from the Persian Gulf will be at their highest since July last year.


  • Saudi-led coalition launches air strikes on Yemen’s main port city | Reuters
    https://www.reuters.com/article/us-yemen-security/saudi-led-coalition-launches-air-strikes-on-yemens-main-port-city-idUSKBN1K

    A Saudi-led coalition launched heavy air strikes on Yemen’s main port city of Hodeidah on Friday, in an apparent resumption of military operations on the Red Sea city after the Iranian-aligned Houthi movement attacked two Saudi oil tankers.

    Residents said coalition warplanes had begun their bombardment after midnight, attacking a Houthi military police camp in the city center, a plastics factory north of the city, and the districts of Zubaid and al-Tahita to the south.

    #Hodeida #Yemen


  • Saudi Arabia suspends oil exports through Red Sea lane after Houthi attack | Reuters
    https://uk.reuters.com/article/uk-yemen-security/houthis-target-saudi-warship-off-yemen-coast-al-masirah-tv-idUKKBN1KF0WN

    Top oil exporter Saudi Arabia said on Thursday it was “temporarily halting” all oil shipments through the strategic Red Sea shipping lane of #Bab_al-Mandeb after an attack on two big oil tankers by Yemen’s Iran-aligned Houthi movement.

    Saudi Energy Minister Khalid al-Falih said in a statement sent by his ministry that the Houthis had attacked two Saudi Very Large Crude Carriers (VLCCs) in the Red Sea on Wednesday morning, one of which sustained minimal damage.

    Saudi Arabia is temporarily halting all oil shipments through Bab al-Mandeb Strait immediately until the situation becomes clearer and the maritime transit through Bab al-Mandeb is safe,” the statement said.

    #Bab_el_Mandeb

    • Les deux pétroliers, non identifiés, appartiennent à Bahri, la filiale Maritime de Saudi Aramco.

      Saudi Arabia suspends oil exports through Bab al-Mandeb | Yemen News | Al Jazeera
      https://www.aljazeera.com/news/2018/07/saudi-arabia-suspends-oil-exports-bab-el-mandeb-180725215417388.html

      A statement by the coalition said one tanker was attacked west of Yemen’s Hodeidah port but did not name the vessel or describe how it was hit.

      The Saudi oil tanker was subjected to slight damage due to the attack by the Houthi militia,” the statement said. “Thankfully the attack failed due to immediate intervention of the coalition’s fleet.

      A statement from Saudi Aramco said “two Very Large Crude Carriers [VLCCs], each with a two million barrels capacity ... were attacked by terrorist Houthi militia this morning in the Red Sea. One of the ships sustained minimal damage. No injuries nor oil spill have been reported”.

    • هل هُناك عَلاقة بين هُجوم الحوثيين على نَاقِلَة نِفط سُعوديّة في البَحر الأحمر وتَهديد إيران بإغلاق مَضيق هرمز؟ ولماذا تتزايَد تسريبات الإمارات حَول نواياها بسَحبِ قُوّاتِها مِن اليَمن هَذهِ الأيّام؟ وكيف نُفَسِّر الصَّمت السُّعوديّ تُجاهَها؟ | رأي اليوم
      https://www.raialyoum.com/index.php/%d9%87%d9%84-%d9%87%d9%86%d8%a7%d9%83-%d8%b9%d9%84%d8%a7%d9%82%d8%a9-%d8%

      Edito ABA dans Rai al-yom : "Y a-t-il un lien entre l’assaut des Houthis contre le pétrolier saoudien en mer Rouge et les menaces iraniennes de fermer le détroit d’Hormuz ? Pourquoi voit-on se multiplier les rumeurs à propos d’un retrait des forces émiriennes au Yémen ? Pourquoi ce silence saoudien sur ce sujet ?

    • D’après Mujtahidd, il ne s’agit pas d’un pétrolier mais bel et bien d’un bâtiment de guerre....

      السفينة التي ضربت قرب باب المندب كانت بارجة حربية سعودية لكن ابن سلمان تحاشى أن يعترف أن الحوثيين لديهم قدرة على تدمير سفنه الحربية فزعم أنها ناقلة نفط الأحمق لم يدرك أن الاعتراف بعجز كامل عن حماية باب المندب بعد ثلاث سنوات من الحرب أخطر من الاعتراف بضرب بارجة حربية

    • UAE Calls Houthi Attack on Oil Shipments Totally Irresponsible - The New York Times
      https://www.nytimes.com/reuters/2018/07/26/world/26reuters-yemen-security-emirates.html

      An attack on Wednesday by Yemen’s Iran-aligned Houthi rebels on two oil tankers in the Red Sea was totally irresponsible, United Arab Emirates Minister of State for Foreign Affairs Anwar Gargash said.

      This is a totally irresponsible act,” he told an audience in London on Thursday. “The effect of it actually is much wider than the region.

      He added: “I think this is another example of why the Houthi takeover of the Yemeni government in Sanaa should end.

      Saudi Arabia and arch-foe Iran have been locked in a three-year proxy war in Yemen, which lies on one side of the Bab al-Mandeb strait at the southern mouth of the sea, one of the most important trade routes for oil tankers heading from the Middle East to Europe.

      The UAE is part of a Saudi-led coalition of Arab states fighting to gain control of the Houthi-controlled main port of Hodeidah.

      The only way forward is to get Hodeidah,” Gargash said. “What we are planning to do is give diplomacy every possible chance to secure that.

      #yapuka … l’offensive « finale » sur Hodeida démarrée le 13 juin est « en pause » pour laisser sa chance à la diplomatie depuis le 1er juillet.

    • Saudi Arabia resumes oil exports through Red Sea lane | Reuters
      https://www.reuters.com/article/us-yemen-security/saudi-arabia-to-resume-oil-exports-through-red-sea-lane-idUSKBN1KP0B7

      Top oil exporter Saudi Arabia said on Saturday it has resumed all oil shipments through the strategic Red Sea shipping lane of Bab al-Mandeb.

      Saudi Arabia halted temporarily oil shipments through the lane on July 25 after attacks on two oil tankers by Yemen’s Iran-aligned Houthi movement.

      A statement by the Energy Ministry said shipments had resumed on Saturday.

      The decision to resume oil shipment through the strait of Bab al-Mandeb was made after the leadership of the coalition has taken necessary measures to protect the coalition states’ ships,” Energy Minister Khalid al-Falih said in the ministry statement.


  • Yemen’s Houthi leader says could target Saudi oil tankers if Hodeidah attacked
    https://www.reuters.com/article/us-yemen-security/yemens-houthi-leader-says-could-target-saudi-oil-tankers-if-hodeida-attacke

    Yemen’s Houthi leader Abdel-Malek al-Houthi said on Thursday his group could target Saudi oil tankers should Saudi Arabia attack Yemen’s main port at Hodeidah.

    We could target Saudi oil tankers and we could do anything,” he said.

    In a televised speech, the leader also said his group’s ballistic missiles were capable of reaching the United Arab Emirates’ capital of Abu Dhabi and anywhere inside Saudi Arabia.

    It was unclear whether the Houthi group has the capability to carry out its threats.


  • Abu Dhabi petroleum port eases limits on oil tankers sailing to and from Qatar | Business | Reuters
    http://ca.reuters.com/article/businessNews/idCAKBN18Y1DY-OCABS

    Abu Dhabi petroleum port authorities have eased restrictions on oil tankers going to and from Qatar, according to industry sources and shipping circulars seen by Reuters on Wednesday.

    Abu Dhabi Petroleum Ports Authority issued a new circular on Wednesday removing previous restrictions on non-Qatar owned, flagged or operated vessels sailing to and from Qatar.

    This effectively allows co-loading of crude cargoes, a Singapore-based shipbroker said.

    A Middle East-based industry source said there had been no official notification on halting the co-loading of crude cargoes.

    Un pétrolier provenant du Qatar où il a chargé une partie de sa cargaison peut donc venir compléter son chargement à Abou Dhabi. Sauf s’il est sous pavillon qatari, bien entendu.

    But given there are few Qatari-flagged or owned vessels, this is unlikely to have as big an impact on the market as the previous circular, the shipbroker added.


  • Iraq plans to acquire ’large fleet’ of oil tankers | Reuters
    http://www.reuters.com/article/us-mideast-crisis-iraq-shipping-oil-idUSKBN15W10M

    Iraq plans to acquire a “large fleet” of oil tankers to transport the OPEC nation’s crude to global markets, Oil Minister Jabar al-Luaibi said in a statement on Friday.

    The nation’s tanker fleet was largely destroyed during the U.S.-led offensive to dislodge Iraq from Kuwait in 1991, according to the state-run Iraqi Oil Tankers Company’s website. The company owned as many as 24 tankers in the 1980s.


  • Mega-Ships May Be Too Big Not to Fail - Bloomberg View
    https://www.bloomberg.com/view/articles/2016-09-14/mega-ships-may-be-too-big-not-to-fail

    It was always going to be tough for the world’s container shipping lines — accustomed to decade after decade of growth in the volume of video-game consoles, auto parts, furniture, frozen seafood and all manner of other things transported in boxes across the sea — to adjust to a slowdown in global trade.

    What has made it a whole lot tougher is that, not long before trade peaked as a share of global gross domestic product in 2008, container shippers began adding capacity at an even faster pace than they had before. Container traffic has actually held up better than bulk shipping (which is heavy on raw materials like iron ore) and oil tankers, with volume still growing in the low single digits annually. But capacity growth has far outstripped demand.


  • Oil tankers backed up at southern French port due to strike | Reuters
    http://www.reuters.com/article/france-politics-protests-ports-idUSL5N18N27B

    Nearly two dozen vessels were queued outside the French oil import terminal in Fos, southern France on Thursday, held up by a strike organised by the hardline CGT and FO unions over planned labour reforms.

    A spokeswoman for the port of Marseille told Reuters that yesterday 29 oil, LNG and chemicals vessels were waiting between the wharf and harbour on Wednesday.

    This morning [May 26], 21 vessels including 12 carrying oil, LNG or chemicals, were waiting. During normal busy operations, about 5 vessels would be waiting, the port authority said.


  • Something Stunning Is Taking Place Off The Coast Of Singapore | Zero Hedge
    http://www.zerohedge.com/news/2016-05-20/something-stunning-taking-place-coast-singapore

    The red dots show ships either at anchor or barely moving, either oil tankers or cargo, which have made the Straits of Malacca, one of the world’s most important shipping lanes which carries about a quarter of all seaborne oil primarily from the Persian Gulf headed to China, into a “bumper to bumper” parking lots of ships with tens of millions of barrels in combustible cargo.

    it is also the topic of the latest Reuters expose on the historic physical crude oil glut which continues to build behind the scenes, and which so far has proven totally immune to dissipation as a result of the sharp increase in oil prices over the past three months.

    http://www.reuters.com/article/us-asia-oil-storage-idUSKCN0YA129

    #Singapour #pétrole #cargo #tanker #transport_maritime


  • Billionaire Shipping Magnate Has Other Fish to Fry in Oil Rout - gCaptain
    https://gcaptain.com/billionaire-shipping-magnate-has-other-fish-to-fry-in-oil-rout

    When the price of a 10-pound (4.5-kilogram) Atlantic salmon jumped above the cost of a barrel of crude last month, nobody in the oil industry was celebrating.

    For John Fredriksen, who built a fortune on oil tankers and offshore drilling, it did at least provide some consolation. While his total net worth fell 40 percent to $10.6 billion in the past 18 months, the value of his investment in the world’s largest salmon producer climbed by half as fish prices rose to a record.

    Fredriksen, who laid the foundation of his shipping fortune in the 1970s and 1980s by making daring bets in the conflict-ridden Middle East, has seen his about 25 percent stake in Marine Harvest ASA turn into his most valuable equity holding. That’s proving to be a boon for the 71-year-old Norwegian-born billionaire amid the worst crude market in a generation.

    Getting into fish was undoubtedly a smart move,” Kolbjoern Giskeoedegaard, an analyst at Nordea Bank AB, said in a phone interview. “What’s important for a system like the Fredriksen system, and which they’ve focused on increasingly these past years, is to put their eggs in several baskets.
    […]
    Fredriksen, now a citizen of Cyprus, has signaled he intends to hold on to his position in Marine Harvest, Chairman Ole Eirik Leroey said in an interview in Aalesund, Norway last week.


  • Oil is now so cheap even pirates aren’t stealing it any more - Quartz
    http://qz.com/619281/oil-is-now-so-cheap-even-pirates-arent-stealing-it-any-more

    Stealing the oil from a ship is no mean feat.

    Oil tankers are enormous, and ships that carry expensive cargo are designed to be difficult to board. Stealing can mean hijacking the original tanker, disabling its tracking devices, taking it to a location where it can’t be spotted, and transferring thousands of heavy barrels to a different vessel that can then be sailed away. Stealing crude also means finding a buyer for it, or else getting involved in the messy and dangerous business of illegal refining.

    Over the past six months, the price of oil has plunged due to a global oversupply. And for some pirates, it’s just not worth stealing it any more.

    #énergie #pétrole


  • Saudi Arabia will not stop pumping to boost oil prices - Financial Times

    http://www.ft.com/cms/s/0/b639a458-8600-11e5-9f8c-a8d619fa707c.html#ixzz3qzE9lYg9

    Saudi Arabia is determined to stick to its policy of pumping enough oil to protect its global market share, despite the financial pain inflicted on the kingdom’s economy.
    Officials have told the Financial Times that the world’s largest exporter will produce enough oil to meet customer demand, indicating that the kingdom is in no mood to change tack ahead of the December 4 meeting in Vienna of the producers’ cartel Opec.

    “The only thing to do now is to let the market do its job,” said Khalid al-Falih, chairman of the state-owned Saudi Arabian Oil Company (Saudi Aramco). “There have been no conversations here that say we should cut production now that we’ve seen the pain.”
    Saudi Arabia rocked oil markets last November when Opec decided against production cuts, making clear that the kingdom was abandoning its policy of reducing supplies to stabilise the price.
    Since then, the oil price has collapsed from a high of $115 a barrel last year to $50 a barrel.
    Global oil companies, which have put hundreds of billions of dollars of investment on hold as a result of low prices, will be disappointed by the Kingdom’s stance.
    The effect on business sentiment has sparked domestic criticism of the market share policy engineered by Ali al-Naimi, the oil minister, and agreed by both the late King Abdullah and the current King Salman, who was crown prince last year and ascended the throne in January.
    Officials in Riyadh say their policy will be vindicated in one to two years when revived demand swallows the global oil glut and prices begin to recover.
    They argue that in the past, Opec output cuts raised prices to levels where more expensive production, such as shale and deep-sea oil, could flourish. Moving ahead, Opec — led by Saudi Arabia — plans to pump as much as it can towards meeting global oil demand, leaving higher-cost producers to make up the remainder.
    $100 oil was perceived as a guarantee of no risk for investment. Now, the insurance policy that’s been provided free of charge by Saudi Arabia does not exist any more
    – Khalid al-Falih, chairman of Saudi Aramco
    For higher-cost producers, “$100 oil was perceived as a guarantee of no risk for investment”, said Mr Falih. “Now, the insurance policy that’s been provided free of charge by Saudi Arabia does not exist any more.”
    Mr Falih, who is also health minister, forecast the market would come into balance in the new year, and then demand would start to suck up inventories and storage on oil tankers. “Hopefully, however, there will be enough investment to meet the needs beyond 2017.”
    Other officials also estimated that it would probably take one to two years for the market to clear up the oil market glut, allowing prices to recover towards $70-$80 a barrel.
    The fall in government revenues has pushed Saudi Arabia’s oil-dependent economy into a fiscal crunch. To fund this year’s budget deficit of 20 per cent of gross domestic product, the government is dipping into its massive financial reserves.
    Officials are also working on a more sustainable strategy to curtail spending, which has ballooned in recent years.
    Delaying infrastructure projects, such as the Riyadh underground, and enforcing a spending squeeze across government departments has brought a slowdown in the private sector.
    Senior officials dismiss the domestic criticism of the oil policy, saying other producers would have quickly replaced any Saudi production cuts with new output.

    Officials, however, acknowledge that the extent of the oil price slump has been deeper than initially envisaged.
    “We knew that it was going to be painful but the extent of the pain went beyond our expectations,” said Mr Falih. “The market has overreacted as it typically does in such down-cycles.”
    But oil producers are now cancelling projects outright, rather than just deferring them, raising concerns of a future jump in price if demand outpaces supply.
    “Now everyone is running to the exit and projects are being cancelled,” said Mr Falih. “That’s necessary, but what will happen five to 10 years from now? Investment is needed.”