Saudi Arabia Slashes Oil Output in December

From Fox Business

The sharp cut in production sent the price of European benchmark Brent crude to its highest level since October and U.S. benchmark West Texas Intermediate crude hit a near four-month high.

Saudi Arabia is the world’s top oil exporter and has played an important role in the last two years as one of the few countries with enough spare production capacity to respond to market changes. It substantially lifted production to fill supply gaps caused by the civil war in Libya in 2011 and kept it high as the West imposed tough oil sanctions against Iran last year.

As demand for crude from the Organization of the Petroleum Exporting Countries falls this year, the Saudi cut shows that the kingdom, “still wants to have, and does have, the role as the swing producer in the market,” said Thina Saltvedt, a senior oil market analyst at Nordea Bank Norge.

Saudi oil production fell to 9.025 million barrels a day in December compared with 9.49 million barrels a day a month earlier, according to a person with direct knowledge of Saudi oil supply.

That marks the sharpest month-on-month cut in Saudi oil production since January 2009 when the country responded to the collapse in energy demand due to the global recession, according to data on the website of the Joint Organizations Data Initiative, a collaboration between oil producers and consumers aimed at increasing energy market transparency.

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