The global oil market is not competitive because of Saudi Arabia which can flood the market instantly, an expert from the U.S. Federal Reserve Bank, FED, said Friday.
"Saudi Arabia can flood the market, like they did in March," Mine Yücel, senior vice president and director of Research at FED of Dallas, told Anadolu Agency.
She explained that Saudi Arabia put an extra of 650,000 barrels a day of crude on average in March. She added "They were producing 10.3 million barrels a day last month – the highest they have produced in a long time."
The kingdom's crude oil production rose to 10.31 million barrels a day in April from 10.29 million barrels a day in March, according to OPEC's monthly oil market report published Tuesday.
The world's biggest crude oil producer and exporter has also increased its annual oil output, producing an average of 9.71 million barrels a day in 2014, from 9.64 million barrels per day in 2013, the report shows.
Noting that Saudi Arabia is the only country in the world with excess capacity, the bank's expert emphasized that "King Salman is trying to build a new place for his country in the world market."
King Salman appointed Saudi Aramco's chief executive and president Khaled Al-Falih as chairman of the board of directors of Aramco; its national oil company, earlier this month.
Saudi Arabia also announced on May 1 that it is restructuring Aramco by separating it from the kingdom's oil ministry. This is in order to improve governance and commercial operations of the company, which will begin focusing heavily on the refining business.
- U.S. crude oil ban
Yücel said if the U.S. ban is lifted on exporting domestically produced crude oil; it would make economic sense since it will benefit U.S. producers.
"Economically, it makes sense to remove the oil export ban. Of course, there are some industry groups that would prefer to keep it place, such as the refiners," she explained.
"Oil exports will definitely benefit U.S. producers. To see what U.S. exports will mean for oil prices, we will have to wait and see how the market reacts," she said.
A group of U.S. senators introduced a bipartisan bill on Wednesday to end the 40-year-old self-imposed ban on U.S. crude oil exports.
Lisa Murkowski, the chairwoman of the Senate Committee on Energy and Resources, joined forces with Democrat Senator Heidi Heitkamp and 11 others to introduce the bill.
"This bipartisan legislation would modernize federal energy policy by ending the outdated ban on crude oil exports," the committee said in a statement on its website.
"America’s energy landscape has changed dramatically since the export ban was put in place in the 1970s,” Murkowski said in the statement.
"We have moved from energy scarcity to energy abundance," Murkowski said.
Since its shale oil boom in 2008, the U.S. has increased its domestic oil production rapidly, from around 5 million barrels a day in 2009 to more than 8 million barrels per day in 2014.
The U.S.'s Energy Information Administration projects the country's crude oil production to rise from an average of 9.3 million barrels a day in 2015, to reach a record 10.6 million barrels per day in 2020.
The U.S.; the world's biggest economy, is the third largest oil producer in the world after Saudi Arabia and Russia.
(Anadolu Agency)
