Oil Prices Falling

Crude oil prices continued their decline today, with Brent benchmark dropping below $94 a barrel; now at their lowest levels since June 2012.

Crude prices have been under pressure in recent months, but Saudi Arabia’s signaling to the market that it was interested more in maintaining its market share than in defending prices put added pressure. Saudi Aramco on Wednesday announced that it was cutting prices by about $1 a barrel to Asia, the crucial growth market for the Persian Gulf producers. Weaker than expected growth in China, and supply growth are seen as important factors in falling prices, and Saudis apparently want to maintain their number one position as the biggest oil exporters to China.

Brent crude, the main international benchmark, closed at $93.42, down 74 cents, on Thursday. Some analysts expect downward pressure on prices to continue into 2015.

The main source of supply growth is the United States, which now rivals Saudi Arabia and Russia in oil output. IEA said the U.S. produced about 8.5 million barrels a day of crude oil in August; Saudi Arabia is producing an estimated 9.8 million barrels a day.

File photo: IRNA

U.S. on Pace to Become Biggest Oil Producer

The U.S. oil production is surging so rapidly that the United States could overtake Saudi Arabia as the world’s biggest producer in less than two years. The U.S Energy Department forecasts that U.S. oil output will average 11.4 million barrels per day in 2013, a record for the U.S. and just below Saudi output of 11.6 million b/d. This year, the U.S. production will average 10.9 million b/d. (AP, 23 October)

The high oil prices and new drilling methods are said to be the main factors behind a 7 percent rise in production this year.  

The U.S. will still need to import oil in the years ahead (the country uses 18.7 million barrels per day.) But because of the growing domestic production and the improving fuel efficiency of U.S. cars and trucks, imports could fall by half by the end of the decade.