Saudi Arabia to cut oil output to meet U.S. demand

U.S. Looks to Re-Evaluate Ties With Saudi Arabia Over Oil Production Cut


February 01, 2013

DUBAI, United Arab Emirates (AP) — The Obama administration is starting the year with a fresh look at its relationship with the world’s leading oil producer, Saudi Arabia, over its decision to cut oil output by about 1.2 million barrels per day this week, hoping to defuse a dispute over the need for international involvement in the crisis in neighboring Yemen.

The U.S. Energy Department is looking into whether it can meet an emergency request from Saudi Arabia to ease pressure and maintain oil production by reducing Saudi Arabia’s crude oil exports to the U.S. and replacing that with more imports.

The Saudis are hoping to stabilize the global oil price, which at $110 a barrel has been on a steeply downward trajectory since the beginning of February. With no increase in crude prices, they have argued that the market has pushed down the cost of production.

“The Kingdom of Saudi Arabia is committed to reducing oil exports at this critical juncture in the industry,” Saudi Energy Minister Khalid al-Falih told reporters Friday.

The Saudis have in recent months stopped importing much crude from other countries to fulfill their domestic demand and now make up for their loss of Saudi oil. Since the beginning of the year, they have bought more than 1 million barrels per day from the U.S. and other countries to replace Saudi oil, though they were hoping to bring on more imports, Falih said.

The Saudis in particular have grown anxious at the lack of international involvement in Yemen, an impoverished Arab country that has seen a steady flow of violence from the Huthi rebels, who reject the government, and the Iran-allied Houthis, which are supported by a Houthi rebel group. As a result, the Saudis have been reluctant to pressure President Abd-Rabbu Mansour Hadi’s government, despite repeated pleas from Gulf countries calling for U.S. help.

On Wednesday, the U.S. canceled a scheduled meeting with the Saudis because of U.S. concerns about the violence in Yemen. U.S. Secretary of State John Kerry said it was critical that the Saudis help the government and prevent conflict as it did with its role in Libya.

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