There's another shakeup in the global oil market, after Saudi Arabia announced plans to cut production by one million barrels per day. The move is seen by some as a subtle shot at the U.S., where the Biden administration has pressured the Saudis to increase production as a means to bring down prices. But other experts say this is strictly a move of self-interest. "This is all about shoring up prices for Saudi crude oil, so they can raise their revenue," says Karr Ingham, Texas petroleum economist. "It may have the ancillary impact of irritating the Biden administration, but I don't think that's what's at the core of this."
The cut in production will likely mean a modest hike in prices, but Ingham tells KTRH that is not necessarily a bad thing for domestic producers. "It all depends on your perspective," he says. "From the standpoint of the consumer it's negative, but this may be just fine with you if you are a U.S. oil and gas producer, or you live and work in an oil producing state or region like the great state of Texas."
The bigger domestic concern for Ingham and others is the continual draining of our Strategic Petroleum Reserve (SPR), which is at historic lows due to drawdowns by the Biden administration during the past two years. "We are about 300,000 barrels short of the level of domestic production we were at in 2019," says Ingham. "Now, we are supplanting that 300,000 barrels by continuing to release that amount from the SPR."
"We continue to release significant amounts out of the SPR to this day," he continues. "And unless that stops and we begin to refill that thing, then we're going to have these impacts on prices here."
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