Looks to me like demand for their crude, at their posted prices, is still very strong. And as of approximately June 1 Iran is cutting back another 500,000 barrels per day or so, which changes this balance as of that date.
So yes, there are lots of cross currents- new supply, inventory jugglings of various sorts, etc.
But bottom line remains the net ‘call’ on Saudi crude, and what the Saudis want to charge for it.
That is, every day we either pay their price or let inventories run off or shut the lights off for a few hours.
Warren, Is really their price and the US government cheerfully acquieces, or is more like a tacit arrangment that benefits certain interests in the US/Europe as well? If not, why do we let them get away with it? Cui bono?
From what I’ve read our govt. doesn’t get it.
Not to the US doesn’t apply pressure from time to time.
This time it might have been lower prices for support of the Saudi regime. No telling!
But with Iran cutting again this month due to sanctions and Saudis nearing capacity it’s possible they could lose control of price on the upside.
Just to add, despite what Naimi is saying to the media about refiners not buying and inventories being full, this production is actually being bought by refiners as Saudi inventories have been around the 78 million bbl since June 2011.
See http://www.jodidb.org/TableViewer/tableView.aspx?ReportId=2415
The initial spike in production beginning March 2011 was not obsorbed until they began lowering their premiums/discounts in the following months. Inventories were only at 36 million bbl in January 2011.