NEW YORK — Saudi Arabia is still the boss when it comes to oil.
The world’s biggest oil exporter plans to increase production to 10 million barrels per day, the highest level in 30 years, according to a Saudi Arabian newspaper. Analysts see this as a bold step by the Saudis to reassert their dominance over OPEC after the 12-member group this week denied its request to increase production.
“They’re reminding everyone who the sheriff is in town,” independent analyst Jim Ritterbusch said.
If Saudi Arabia follows through, the country will increase production 13 percent from May. This will add another 1.14 million barrels per day to the market, helping to close a shortfall in supply. OPEC says world demand will exceed supply by 1.45 million barrels per day in the third quarter. The U.S. Energy Information Administration puts the shortfall at 1.81 million barrels per day.
The last time Saudi Arabia produced that much oil was August 1981, according to the Energy Information Administration.
The Saudis have maintained that oil prices are too high, even after a recent decline. At the end of April, oil was up 25 percent for the year and U.S. gasoline prices were up 28 percent, near an average of $4 per gallon. Americans have cut back on driving to compensate, according to industry surveys. But gas is still up 21 percent since January, at $3.72, and experts warn that the economy will struggle to grow as long as consumers are paying high pump prices.
