LONDON: Saudi Arabia is set to pump 10.5 million barrels a day of crude in the third quarter, a million bpd increment over the second quarter and its highest quarterly level of production ever, leading U.S. energy consultancy PIRA said.
“The reason they’re producing that much is simple: the world needs the oil,” said PIRA CEO Gary Ross. “This is the tightest physical balance on the world oil market I’ve seen for a long time.”
Libyan oil output has fallen from 1.4 million bpd to just 250,000 bpd after protesters shut oil fields.
Saudi Arabia, OPEC’s biggest producer, is the only oil producer with any significant spare capacity.
Ross said about 400,000 bpd of the incremental supply would go to feed domestic Saudi power usage during peak summer demand for air conditioning.
He said without another increase this year from U.S. shale oil, the world would be short of crude and oil prices would be much higher.
“Without U.S. shale we’d be short about 1.5 million barrels a day in the third quarter and prices would have gone up dramatically to ration demand,” said Ross.
U.S. shale oil production was now about 2.5 million bpd, up 900,000 bpd in a year, he said.