The UK edition of the Business Insider reports today:
There is proof that Saudi Arabia is more interested in trying to kill competition in the oil industry at the expense of cratering oil prices — its oil production just hit a record high.
The country said output increased by 123,000 barrels per day, which pushed overall production for July to 10.67 million barrels per day. This surpasses the previous record of 10.56 million per day from June last year.
While Saudi does usually pump out more oil in the summer months to sate domestic demand, the record production level is likely to be scrutinised because oil prices are still around 55% lower than they were at their last peak in June 2014.
Currently, oil prices are just above $40 per barrel.
At the moment, there is too much oil in the market. Supply is high and demand is low, meaning oil prices are dampened from triple digit levels of the summer of 2014.
The market, at one point, was so flooded with oil, prices threatened to fall as low as $20 per barrel at the beginning of this year.
The situation is so bad that the Saudi government said petrol prices, which are usually very cheap in Saudi Arabia because of the glut of oil the country produces, may increase by 50%; and diesel, electricity, and water prices will also increase to help offset the drop in foreign revenues.
Meanwhile, Saudi Arabiareported that its budget deficit — the amount by which government expenditures exceed revenue — for 2015 hit $98 billion (£65.7 billion).
Yet Saudi Arabia’s economic situation is logically a product of its own doing. This is because it produces so much oil that it has the power to move prices — Saudi Arabia is the largest country in the 13-member OPEC cartel of oil producers.
The record levels of production just shows how it does not care about oil prices falling, or at least being dampened for a prolonged period of time, so long as oil producing rivals like the US and Russia are being subdued.
Read more at Business Insider