EMEA News
Saudi King's Son: No Production Freeze Unless Iran Plays Ball
As if to corroborate critics' consensus that the April 17 meeting of oil producing nations to discuss curbing output is futile, Deputy Crown Prince Mohammed bin Salman of Saudi Arabia said his country will not agree to any freeze unless Iran and other major producers do so.
Given that Iran has repeatedly stated its intentions to boost production until its crude exports reach pre-sanction levels, Salmon's remark caused U.S. oil to plummet 4 percent on Friday to $36.79 per barrel.
Matt Smith, director of commodities research at Clipperdata, wrote in a commentary, "The King's son threw cold water on hopes of a production freeze."
And following on from reports that Saudi's efforts to put higher production cost tight oil out of business is having little impact on volumes, with U.S. shale players pumping oil stronger than ever despite numerous bankruptcies, there are further signs that the low price war is set to continue.
Economically troubled Saudi is also trying to raise cash for the long haul by selling less than 5 percent of shares in Saudi Arabian Oil Co., also known as Saudi Aramco, the world's biggest oil exporter said to be worth over $2.5 trillion (based on a $10 per barrel valuation).
Currently, Aramco's refining capacity is about 5.4 million barrels per day, and it's aiming to boost production to as much as 10 million with new plants in Asia.
Salmon says another goal is to transform Aramco from an oil and gas to an energy-industrial company by delving into the petrochemical and engineering sectors: "Aramco is now the biggest company in the world and it has the capability of controlling the shape of energy in the future, and we want to venture into that from today."
Whether or not Salmon's ambitions prove fruitful, his country's oil strategy has been cited as the reason for "the worst internal crisis" in the Organization of the Petroleum Exporting Countries' (OPEC) 55-year history, as the goal of quashing non-OPEC producers - which has so far been minimally successful - is pursued no matter the cost.
