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Re: OIL AGAIN!
Even more worth noting that Saudi output during 2007 and 2008's high prices was lower than in 1980 and well below the claimed 12.5 million barrel per day capacity.
So I'd say that if they really do have that capacity then either there's some technical reason why they don't want to use it (can't be sustained, poor quality oil, ports can't handle the volume etc) or they've decided that $145 per barrel was not a high enough price to warrant that level of production.
My personal thinking is that this is their capacity to export from all sources which includes drawdown of above ground stocks. That is, they can ship 12.5mmbpd but the amount taken from the ground would be lower. So in effect it's the capacity of the ports and not the capacity of the oil fields.
That observation is simply based on the evidence that, for whatever reason, they have never appeared to want to go to that level and that whenever production approaches 10.0 mmbpd it is soon scaled back even if prices and demand are still rising, a scenario that points to them not being able (or willing) to sustain output at that level no matter what the market situation at the time.
Time will tell but I'll be truly surprised if we see Saudi production average more than 10.0 mmbpd over any calendar year. If they really do have the capacity then they've been incredibly disciplined at not using it thus far.
Worth noting that they have claimed 12 - 12.5 mmbpd capacity for around three decades now and have never actually produced at that level, at least not for any significant period, according to accepted data sources.
Even more worth noting that Saudi output during 2007 and 2008's high prices was lower than in 1980 and well below the claimed 12.5 million barrel per day capacity.
So I'd say that if they really do have that capacity then either there's some technical reason why they don't want to use it (can't be sustained, poor quality oil, ports can't handle the volume etc) or they've decided that $145 per barrel was not a high enough price to warrant that level of production.
My personal thinking is that this is their capacity to export from all sources which includes drawdown of above ground stocks. That is, they can ship 12.5mmbpd but the amount taken from the ground would be lower. So in effect it's the capacity of the ports and not the capacity of the oil fields.
That observation is simply based on the evidence that, for whatever reason, they have never appeared to want to go to that level and that whenever production approaches 10.0 mmbpd it is soon scaled back even if prices and demand are still rising, a scenario that points to them not being able (or willing) to sustain output at that level no matter what the market situation at the time.
Time will tell but I'll be truly surprised if we see Saudi production average more than 10.0 mmbpd over any calendar year. If they really do have the capacity then they've been incredibly disciplined at not using it thus far.