Oil Production Analysis of Saudi Arabia

        Saudi Arabia seems to possess almost eighteen percent of the petroleum reserves of the whole world and ranks as the largest exporter of oil and petrol as well. The gas and oil sector of the kingdom accounts for fifty percent of the GDP and approximately seventy percent of the export earnings. Other than simple petroleum, other nature resources of the nation include copper, gold, iron ore, and even natural gas (OPEC, 2018).

How the market price will be affected in Saudi Arabia?

        The Kingdom of Saudi Arabia has been regarded as the most significant swing producer in the whole world because the government of Saudi Arabia has decreased or increased the production of oil for maintaining a more balanced price. In 2015, the amount of barrels of oil reached almost 12 million barrels every other day. It was actually the highest figure on the basis of records since 1980s. If the Kingdom of Saudi Arabia is to increase the quantity of oil barrels that it increases every year then it would definitely impact the market price. According to the oil circumstances of the whole world and the market, the price would change. However, under normal conditions, the price of oil would decrease.

        In the market, the competition would increase and if there are other firms will also have to lower the prices in order to survive in the market. Saudi Arabia would actually increase the supply when the demand of oil is greater than before and definitely when the nation is selling oil at a larger magnitude then it would be able to achieve more profits. However, as stated before, Saudi Arabia has always acted as a swing producer and it would go back to the low production of oil once its objectives of gaining more profits and leveling the price of oil. On the other hand, the production of oil at high magnitudes and lowering the price will affect the related products.

References Oil Production Analysis in Saudi Arabia

OPEC. (2018). Saudi Arabia facts and figures. Retrieved from OPEC: https://www.opec.org/opec_web/en/about_us/169.htm