Saudi Arabia continues oil market war

Saudi Arabia continues to boost oil production in an alleged bid to take away market share from US producers.

Saudi Arabia boosted its oil output to 10.31 million barrels per day in April, an increase over the previous month's total of 10.29 million barrels, according to OPEC's latest monthly oil report.

Although the increase is small, it was nevertheless significant, as it marked its highest oil production level in more than three decades.

Ever since 2014, Saudi Arabia has amplified production by a whopping 700,000 barrels in an attempt to control the international oil market.

Many believe this is what led to the crash in oil prices that began last year. Oil prices have fallen by 60 percent in the past several months but have recently gained some losses. However, those gains still remain fragile.

The resulting collapse of crude prices forced some companies in oil producing countries out of the market including in the US where production hasn't been at all time highs.

OPEC said in its report that "there was a 23-week time lag between the fall in rig counts and the resulting dip in oil production in the United States. But the effects of the oil price crash are now being felt."

This was reiterated in a way by the US Energy Information Administration (EIA) in a fresh report released recently confirming that oil production is declining in America.

The report predicted that there would be a 57,000 barrel-per-day of oil decline for just in May. And next month 86,000 barrels per day in output will disappear.

Basically, the more crude Saudi Arabia unleashes into the market, the more US producers are forced to cut back on their production. US oil mostly comes from shale which is an unconventional oil produced from oil shale rock fragments by fracking, a controversial method that destroys ecosystems and environments, according to activists, because it's more difficult to obtain the oil than more traditional pumping.

Saudi Arabia is now producing oil at its highest level in more than 30 years. This, according to experts, would potentially have big "negative" impacts on the overall oil markets.

The impacts were especially being felt in the US as several companies have declared bankruptcy.

The latest company to do so was American Eagle Energy Corp., a driller in the state of Colorado, with more predicted to close down soon. 

Saudi Arabia is a key member of the OPEC body. The kingdom's decision in late November not to slash output levels led to further decline in prices.

In November, Saudi Arabia's Oil Minister Ali al-Naimi told fellow OPEC members at a meeting in Vienna that they must tackle the US shale oil boom by lowering prices and undermining the profitability of US and Canadian oil producers.

"Naimi spoke about market share rivalry with the United States. And those who wanted a cut understood that there was no option to achieve it because the Saudis want a market share battle," one Western news agency said then. 

HDS/HB

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