Assessment: Once upon a time before Joe, the United States of America was the world’s largest oil producer. Let that sink in …
Saudi Arabia, the world’s largest crude oil exporter, doesn’t have enough production capacity to boost oil production in a world still hungry for fossil fuels, implying that President Biden’s recent trip to the Kingdom was a waste of time.
Crown Prince Mohammed bin Salman (MbS) told the leaders of the US, the Gulf Cooperation Council (GCC) states, Jordan, Egypt, and Iraq at a meeting this weekend that additional capacity to increase production to 13 million barrels per day (bpd) by 2027 will be challenging.
“But he will be a wild donkey of a man; His hand will be against everyone, And everyone’s hand will be against him; And he will live in defiance of all his brothers.” Genesis 16:12
WSJ’s energy correspondent Summer Said the Kingdom’s production stands around 10.5 million bpd and has a production capacity ceiling of 12 million bpd. That means the potential output increase is only 1.5 million bpd. And another million bpd in five years.
Summer spoke with people familiar with Saudi oil flows and said the Kingdom would struggle to produce another half million bpd at 11 million bpd. And it would be tough even to get production at 12 million bpd. They gave a handful of reasons why bringing on spare capacity would be a troubling task, such as maintenance requirements, declining production at some oil-producing fields, and technical issues involving pressure levels. It was also noted that when state oil company Aramco reduced drilling during the early days of the virus pandemic because of plunging global demand, boosting output rapidly by injecting wells with fluids to increase production could cause longer-term damage.
The revelation that the Kingdom nears the long-term upper limit should not come as a surprise to many, as French President Emmanuel Macron stated at the recent G7 meeting that spare production capacity was very limited for the Saudis and UAE.
Bloomberg’s energy reporter Javier Blas opined this in a Bloomberg Opinion piece:
Saudi Arabia, the holder of the world’s largest oil reserves, is telling the world that in the not-so-distant future it “will not have any additional capacity to increase production.”Let that sink in.
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