Continuing to demonstrate hyper-priapism, oil inches unsteadily but seemingly inexorably towards the symbolic watershed of $100 per barrel despite high output. Prices briefly rose to over $95 a barrel before dropping back to just over $92 Nov. 29 as an Enbridge Inc. crude pipeline linking Canada to the US exploded in Minnesota. Saudi Arabian Oil Minister Ali al-Naimi helped the price level off by reiterating OPEC’s stance that crude supply is healthy, saying “there is no relationship between the fundamentals today and the price… We believe that the world market is well supplied and petroleum inventories are comfortable.” (Thomson Financial, Nov. 29) This is precisely what is so scary. OPEC is already pumping it out like crazy, with Saudi Arabia the only member with real available spare capacity to bring to the market…
UAE Minister of Energy and current OPEC president Mohammed bin Dhaen al-Hamli told reporters on Nov. 28 that OPEC has spare capacity of around 3 million barrels per day, of which 2.8 million bpd is in Saudi Arabia alone. (Reuters, Nov. 28) As we’ve noted, global oil consumption stands at 20 million bpd.
Just last month, when a fire at an Exxon refinery in Montana similarly jacked prices up, they hadn’t even reached $90 a barrel. The next Gulf hurricane or Mideast terror attack could well bring us to the psychologically (at least) apocalyptic $100. Will it happen by year’s end?
Our last post on Saudi Arabia and the global struggle for oil.