An expected increase in Saudi Arabia’s oil production to offset Libya’s crude disruption following the failure of OPEC to reach agreement on raising quotas would sharply boost the Gulf Kingdom’s revenue and allow it to record massive surpluses, the country’s largest bank said on Tuesday. Saudi Arabia, the world’s largest oil exporter, is already pumping much above its OPEC-assigned quota after the ongoing conflict in Libya depressed its crude supplies to the global market by nearly 90 per cent, National Commercial Bank (NCB) said in a study sent to Emirates 24/7. Other members of the 12-nation Organization of Petroleum Exporting countries raised their production levels to meet the supply shortage. Since the collapse of oil prices in late 2008 following the global fiscal distress, OPEC members agreed to cap their total production at 24.845 million barrels per day excluding Iraq which is exempt from the quota system. During May, Iraq produced almost 2.65 million bpd, contributing to OPEC’s total of 28.9 million bpd, according to NCB. Referring to last week’s OPEC conference, it said GCC members, GC members suggested an increase in supply by 1.5-2 million mbd as growth is expected to pick up as well as to cap rising oil prices which might curb global growth. The proposal faced opposition from some members as they expect prices to ease in the near-term and higher output would cause another collapse. “Marking the first failure to reach an agreement in over 20 years, rumors point towards Saudi that is expected to meet the proposed increase, given its spare capacity of over 3 million mbd,” NCB said. “With current production levels at almost nine million mbd, revenues would increase by over 11 per cent and would result in an unprecedented surplus in the Kingdom’s accounts……...in brief, if additional supplies are met with demand, this could prove very fruitful for Saudi Arabia as oil prices are well above the budgeted break-even price.”

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