Here's proof that Saudi Arabia doesn't care about killing oil prices - only the competition
Reuters
The country said output increased by 123,000 barrels per day, which pushed overall production for July to 10.67 million barrels per day. This surpasses the previous record of 10.56 million per day from June last year.
While Saudi does pump out more oil usually in the summer months to sate domestic demand, the record production level is likely to be scrutinised because oil prices are still around 55% lower than they were since June 2014.
Currently, oil prices are just above $40 per barrel.
At the moment, there is too much oil on the market. Supply is high and demand is low, meaning oil prices are dampened from triple digit levels of the summer of 2014.
The market, at one point, was so flooded with oil, prices threatened to fall as low as $20 per barrel at the beginning of this year.
Investing.com
Meanwhile, Saudi Arabia reported that its budget deficit - the amount in which expenditures exceed revenue - for 2015 hit $98 billion (£65.7 billion).
Yet Saudi Arabia's economic situation is logically a product of its own doing. This is because it produces so much oil that it has the power move prices - Saudi Arabia is the largest country in the 13-member OPEC cartel of oil producers.
The record levels of production just shows how it does not care about oil prices falling, or at least being dampened for a prolonged period of time, so long as oil producing rivals like the US and Russia are being subdued.
There are no other benefits to prices going as low as they are for oil-rich nations other than killing off their direct competition in the long run. The media outlet OilPrice.com and various others, including Business Insider, have pointed out that the lower the price goes, the less oil those rival countries can produce.
Business Insider Australia/CBA
Earlier this month, state oil company Saudi Aramco revealed that it would cut export prices for customers in Asia.
This is a big deal because it is an incentive for Asian customers to buy oil from Saudi Arabia, rather than its competitor Russia.
So all in all, it looks like Saudi Arabia does not really care that oil prices are still comparatively low to that of 2 years ago and therefore hurting the country's finances, just so long as it kills off competition in the long run.
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