By Micah Halpern
I've Been Thinking:
Saudi Arabia announced that as of October, they will be cutting oil output. This Saudi decision is in line with the decision made by OPEC to reduce the amount of oil being sent to refineries.
Saudi Arabia will drop production to all their customers by 380,000 barrels per day. The largest consumer of oil in the world is the Asian market. Japan will most certainly be hurt by this reduction.
Europe normally gets 225,000 barrels per day from the Saudis. In October they will be cut to anywhere from 70,000 to 155,000 barrels. That is nearly a 30% reduction.
Even exports to the United States will be cut.
OPEC needs this to happen. They need to lift the price of oil. In January oil sold at $58 per barrel.
Now the price has dropped to $50, sometimes climbing only as high as $54.
OPEC is counting on this reduction in output - especially by the Saudis, to force the price of oil up.
They are hoping the price will level out at over $75 per barrel.
Micah@MicahHalpern.com
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