Saudi officials attributed the halt in the 300,000-barrels per day field to technical and environmental reasons because of high concentration of harmful emissions. But many have queried the timing as oil prices have slid considerably in the last three months and Saudi Arabia and Kuwait are competing fiercely for supply contracts with Asian buyers. Brent crude steadied around $86 dollars a barrel on Monday, holding on to a rally from near four-year lows last week on the news on the cut in Saudi-Kuwait oil output, with the output of 280,000 to 300,000 halted for an undetermined length of time. “Some market participants seem to ‘buy’ the Saudi story,” said Carsten Fritsch, senior oil and commodities analyst at Commerzbank in Frankfurt. “But this price recovery is unlikely to last unless we get clear messages from OPEC that they will curtail production.” Abundant global oil supplies coupled with a gloomy economic outlook from Europe to China pushed Brent to its lowest since 2010 last week, a loss of more than 25 percent since June. Energy economists have slashed their forecasts of world oil demand growth for next year as the global economic outlook weakens. And it is not clear if OPEC members will cut output to support prices as new supplies from North American shale oil overwhelm the market. Saudi Arabia, Kuwait and Iran have all indicated reluctance to change supply policy. Morgan Stanley oil analyst Adam Longson said the closure of the Khafji oilfield was a temporary factor for the market. “The shutdown was not aimed at OPEC policy and ultimately may not affect production, given spare capacity,” Longson said. Saudi Arabia pumped around 9.7 million bpd in September but says it has the ability to produce as much as 12.5 million bpd.
There has been no comment from Kuwait on the issue. Ashour warned that keeping the issue without an explanation will only fuel confrontation on online social media between Saudi and Kuwaiti activists which will only serve to increase tension between the two countries. The lawmaker was referring to a tense confrontation between Saudi and Kuwaiti tweeters on Twitter yesterday over the issue. Activists exchanged accusations about the responsibility of their countries’ regarding the stoppage. In another development, former Prime Minister Sheikh Nasser Mohammad Al-Ahmad Al-Sabah was expected to appear for the last time before the Public Prosecution late yesterday night, according to his lawyer Emad Al-Saif. Sheikh Nasser has been questioned for over a week regarding accusations made against him by Sheikh Ahmad Al-Fahad Al-Sabah who filed a lawsuit against Sheikh Nasser and former National Assembly Speaker Jassem Al-Khorafi several months ago. No details have been published about Sheikh Nasser’s questioning.
By staff reporter
