Home News Saudi Arabia Wants Oil To Rise To 60 Dollars Per Barrel

Saudi Arabia Wants Oil To Rise To 60 Dollars Per Barrel

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Saudi Arabia Oil Price Update

Saudi Arabia Oil Price Increase

With yet another day in the soap opera of oil and gas prices, Saudi Arabia have stated that they would like oil prices to increase to $60 per barrel during 2017.

$60 per barrel is a level that will encourage fresh investments but will definitely not encourage the United States shale producers to up production.

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This idea is dubious and optimistic, since U.S. developers have been raising oil production since OPEC struck an agreement to restrain production in an attempt to improve prices.

As a matter of fact, according to many experts, it is exactly this boost in U.S. crude output that has been serving as counter-pressure over chances of a decrease in the global oil excess, maintaining the oil price rise inside tight limitations.

The marketplace has acknowledged OPEC’s interestingly high conformity rate, which reached 90 percent since the end of January, but nevertheless, prices have cannot move much more than $55 per barrel for Brent, the international benchmark.

As Reuters indicated previously today, prices dropped today, still trading inside a narrow range of about US$ 3 a barrel.

Saudi Arabia Oil PricesImage courtesy of OilPrice.com

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At the same time, as mentioning by Rystad Energy, the breakeven factor for U.S. shale dropped to an average of $35 a barrel.

During February 2017, production in the shale patch surpassed 9 million bpd for the very first time since last April.

Official records showed, maintaining forecasts that shale boomers are determined to carry on its expansion, investing in new projects and continuing to work on reducing costs.

This will further dampen the spirits of Saudi Arabia and its Gulf allies as the chances of oil reaching the coveted $60 mark which is still the lower end compliance rate wanted by the 11 non-OPEC suppliers that also registered for the production cut.

Saudi Arabia Oil Price Increase

To this day, this rate is around 50 percent, which implies that there is still around half a million extra barrels, according to some estimations, in daily global supply.

It appears that OPEC understands the downward pressures, with numerous officials indicating the cut agreement may need to be stretched into the 2nd half of the year.

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It is understood that six months will not be sufficient to restore the marketplace to a healthier balance, in spite of great initial hopes.

Although an extension could push prices up in the short term, the improved output from shale producers makes $60 per barrel of oil an enthusiastic target. Thanks to oilrpice.com for the update on today’s oil price news, we are sure there are many more twists and turns to come on the subject.

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