Saudi Arabi An Experiment For Reduction The Oil Production

Currently Saudi Arabia is one of the leading producers of oil in the world. However, it is losing its foothold on the market. Many countries, like North America, are increasing their oil production and are looking for ways to become less dependent on foreign oil. The increased competition has caused oil prices to decrease. By producing their own oil, countries not only will increase their revenues, but will also reduce their need to rely on foreign oil. By reducing their need foreign an oil a country does not have to worry that their oil supply will be cut off if they go to war.

Several oil-countries have been facing economic and political turbulence as a result of the crash in oil prices, and there is disagreement among OPEC as how to handle the situation. (Krauss) While this is happening, America’s oil production continues to rise, as it inches closer to becoming an energy superpower in production and consumption; and countries that depend on their oil exports face recession.

Middle East is strategically important region where mostly world half of oil reserves are located. Three countries: Saudi Arabia, Iran and United Arab Emirates accounted for 57% of total Middle East liquids fuels production. (Liquid fuels production in Middle Eastern and North African countries n.d.) Although due to increased domestic production of petroleum and natural gas, the United States is reducing its dependence on foreign oil with imported liquid fuels, but still oil means a lot to the US as oil prices is determined internationally by what is available for all global consumers. Therefore, to safeguard the security of Oil supply in the Middle East and ensure stable access to affordable oil is in the vital interest of the America. (Mexican crude oil shipments to Europe and Asia are rising as U.S. imports fall

Unfortunately there was another great shock because of political instability in Iran. There was much opposition against the current Shah and in the waves of revolution oil stopped flowing. Thereafter, panic ensued and these factors drove up the price of oil as much as three times. This collapse was a

According to current estimates, more than 80% of the world's proven oil reserves are located in OPEC Member Countries, with the bulk of OPEC oil reserves in the Middle East, amounting to around 66% of the OPEC total (OPEC Share of World Crude Oil Reserves, 2014). Competition amongst the U.S. and the Middle East has never reached this level before. There is a constant tension between the two countries and refuse to collaborate in dividing the market share equally. Furthermore, as both nations refuse any bipartisan agreement, there is no limiting the production of oil. Each nation is looking to drive out competition by any means. What they don’t realize is if they cooperated and reached an agreement amongst the international community, oil will remain profitable just as it was a few years ago. Though, this is unlikely to happen any time soon, but will eventually cause Saudi Arabia and other Middle Eastern countries to take a drastic decision when their main source of capital plummets due to the current price of oil. Profits are no longer seen in the oil industry. The Price of oil has been selling at around $50-$60 per barrel, not enough to cover production cost. The United States is able to withstand any contraction within the oil sector, as their financial portfolio is diversified, not solely reliant on the price of

Saudi Arabia is currently considered by the United States Government as a firm international trading partner for petroleum despite the multitudinous human rights violations blatantly executed by the despotic regime of the Arab nation. As a result of this trading with Saudi Arabia, the United States are fueling inhumane treatment of not only the foreign enemies of the Saudi state but also the inhumane treatment of Saudi Arabia’s own people domestically. The United States should immediately begin embargoing the undemocratic and oppressive regime of Saudi Arabia to undermine their government’s unjust actions; only by moving away from Saudi oil, is it plausible that the United States will be

Oil: Riding on the tails of the Arab Spring the price of oil remains high. The Middle East’s eternal

Suppliers of oil including Saudi Arabia, the United States, and now Iran are producing massive amounts of oil. Because they are producing enormous amounts, we can say that supply has increased causing a great reduction in price per barrel or oil which affects gasoline. We

The United States’ increasing dependence on oil is a growing problem. Oil demand is increasing at an outstanding rate, not only in the U.S. but also around the world. Consider this, in 2008, “the world produced about 85 million barrels of oil a

Saudi Arabia is a primarily oil-based economy, with oil being the most important component of the nation’s rapid economic development since World War II. U.S. geologists discovered oil in the region in the 1930s, and since exports expanded most notably in the 1960s, production and rich revenues have been seemingly limitless. The amount of oil in Saudi Arabia’s reserves amounts to close to a quarter of the world’s entire oil resources, and today the country produces about 10,000 barrels a day. As a result, the valuable resource currently accounts for 90% of the country’s exports and contributes to 75% of government revenues annually. During the 1970s, following the Arab-Israeli war, Saudi Arabia’s economy was one of the fastest growing in

The price of oil becomes the bone of contention recently. Oil price seems to be hitting new highs with the regularity of a metronome. It is a bad news for customers who have to pay more on it. More frightening still, this situation may get worse before it come back to normal. No one can exactly predict when the pendulum will soon swing back again since all uncertain factors existing. From the supply side of view, the OPEC is the main producer, being prepared to add or subtract production to balance demand. Moreover, Russia is another major producer of oil in the world. They usually produce more when demand more and subtract when demand reduce to control the price of oil. Anyway, speculator is another factor we have to

In the past decades, Saudi Arabia has played a big role to achieve a balance in the market with reasonable prices for producers and consumers. Saudi Arabia has the capability of producing oil in the large quantities. It has a large number of oil wells that did not reach the maximum production capacity as well as it has oil wells are ready for production and placed as a reserve when needed. For these reasons, Saudi is able to raise production quickly in a relatively short time without incurring significant production costs, what drives prices to decline. but at the same time, Saudi Arabia is also able to curb oil production in order to raise prices globally, especially Saudi Arabia is the second largest oil exporter in the world at the moment, after the United States (See figure.1). Saudi Arabia does not use oil to influence any state as much as it does not want to cede

The currently high price of crude oil amounting to almost US-$ 70 per barrel (May 2006) definitely has a significant impact on the global economy. But the high oil price does not influence every economy by the same degree. Industrialised nations for instance experience a less severe impact than developing countries do. This is because developing countries are generally more dependent on imported oil and because they are not able to use energy as efficiently as industrialised nations. The cause for their lower efficiency and therefore higher dependence is often a lack of availability of advanced and expensive technologies such as efficient fuel powered vehicles, and expensive oil dependent energy production. On average, developing countries need more than twice the amount of oil to produce the same economic output as industrialised countries do. The impacts described in the following part are valid for both ¬- industrialised and developing countries - but for the latter the impacts on the economy are usually much

Besides, due to the rapid economic expansion in some country like China, Brazil, Russia and India, the demand for oil product is increased dramatically. “Global oil consumption grew by a below-average 0.7% per day.” (BP, 2012) This lead the price of oil grows up every year.

The demand for oil has a number of important facts that we can look at starting from 1980 to 2008 where the world’s demand increased by 40%, from 60m barrels per day to over 85m barrels. This was due to the increase in oil consumption of growing economies which make up approximately 66% of total world demand. The other fact is that the demand for oil is relatively inelastic with respect to price, given that oil has few direct substitutes. Similarly, demand for oil is relatively inelastic with respect to income of growing economies. However, income elasticity of demand in developing economies like China and India is likely to be higher.