Saudi Arabia, the world's biggest exporter of crude, is consuming more of its own oil than ever, eroding its ability to cover global shortages as demand rises to a record high.
The desert kingdom may use an unprecedented 1.2 million barrels a day this summer to generate electricity for domestic use as one million people visit the country during the holy month of Ramadan, according to HSBC Holdings PLC. Rising power needs cut the country's surplus oil capacity 33 per cent this year to 2.3 million barrels a day, the lowest since November 2008, while world demand heads toward a record high of 90 million barrels, according to the International Energy Agency.
"We're seeing a contraction in available supply," said David Greely, a New Yorkbased commodities analyst at Goldman Sachs Group Inc.
Goldman Sachs is standing by its forecast that Brent crude will average $130 a barrel next year, even as the price tumbled Monday on concerns about debt in the U.S. and Europe. Subsidized gasoline, power plant inefficiencies and efforts by King Abdullah to provide jobs and housing for a population growing by 2.2 per cent a year are squeezing surplus capacity as turmoil from Libya to Yemen limits supplies.
