Saudi Arabia is finally shedding some light on its proven oil reserves, and I guess it is better late than never. Yet, they are doing this for their own selfish reasons -- and not in the interest of transparency for the good of the global economy.
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A new report shows that for Saudi oil production it may be a new dawn. The Saudis have finally shown their cards. For the first time ever, the country has allowed independent auditors to look at their oil reserves.
The report by the respected U.S. energy consultancy DeGolyer & MacNaughton has concluded that Saudi reserves of easy recoverable oil was at a whopping 268.5 billion barrels, which was even more than the 266.3 billion barrels the Saudis had boasted about. This comes against a backdrop of the U.S. shale revolution that shows that instead of the world running out of oil, we will have enough for hundreds of years, if not longer.
Now don’t think that the Saudis OK’d this audit because suddenly the Kingdom wants transparency for the good of the global economy. It is because they still plan to take part of its state-owned Saudi Aramco public. Because of the previous lack of transparency over the size of the country's energy reserves, many doubted the value the country was putting on Saudi Aramco.
And to counteract any potential pressure on the price of oil, the Saudis also announced this week plans to cut their oil exports by 800,000 barrels a day. They have made it very clear that they want to get the price of oil back above $80 a barrel, so they can make more money when they plan to relaunch their IPO in 2021.
While the world is not as dependent on Saudi oil production as we once were, as I see it they still have the ability to drive oil to that price -- even if we are at the beginning of a new dawn in global oil production.
Phil Flynn is senior energy analyst at The PRICE Futures Group and a Fox Business Network contributor. He is one of the world's leading market analysts, providing individual investors, professional traders, and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline, and energy markets. His precise and timely forecasts have come to be in great demand by industry and media worldwide and his impressive career goes back almost three decades, gaining attention with his market calls and energetic personality as writer of The Energy Report.