Oil Traders, Not Saudi Arabia, Are Responsible For Oil’s 2011 Rise

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“The reason i tell you these figures is because the market is oversupplied.”

These are the words of Saudi Aramco chief Ali al Naimi, speaking about Saudi production figures, in Kuwait, according to Bloomberg.

Saudi energy strategy is becoming clearer by the day. With output levels rising and new blends in the works, it is becoming obvious that Saudi Arabia-for now- is leaving the pricing to speculators and traders in New York and London.

And why not? Rampant speculation on crude markets has driven oil’s price to it’s highest levels since 2009, when it topped out at $147. What does this mean for Saudi? It means that despite executing a stimulus estimated at roughly 10% of it’s GDP, it still may run a
budget surplus this year.

Remember, oil traders love uncertainty and wild markets, and stability means low profits. So while they speculate away in New York and London, Saudi Arabia is pumping more oil that will sell at a higher price and feeling good about it.