Saudi Arabia defends oil output

• In recent time Saudi Arabia has been criticized for not coming to talks over the reduction in production to buoyant the price of crude oil after it fell almost 50% from last year. Both OPEC and non-OPEC producers like Iraq, Oman, Algeria were among the vocal critiques.

• Saudi Arabia's powerful oil minister Ali Naimi has defended Saudi Arabia's position. Currently OPEC output is close to 30 million barrels/day and Saudis' are producing about 30 percent of that.

• Saudi Arabia increased its official selling price yesterday at least by $1.40 for Asian customers and says that the spreads are tightening and demand is improving as a whole.

• Current strategy of Saudi Arabia is to gain market share as it enjoys the lowest production cost of $25 among globe and to increase the demand for oil through low price. The cheap price of crude hurts other energy segment like the renewable s.

What this means -

• Saudi Arabia won't be the one cutting production at least not alone. The cooperation seems to be not working with the presence of Russia. It's now a war between the largest producer and largest exporter.

• This means no respite for crude oil, not at least from the supply side.

• Supply shock might exacerbate with Libya and Iran coming on-line full scale if their individual situation stabilize.