Weakening economies in Europe, Asia, cause Saudi to produce surplus crude
Citigroup Inc. has said oil prices may fall in the third quarter, as economies weaken in Europe and Asia and Saudi Arabia produces surplus crude, Bloomberg reports.
Increased crude production from Saudi Arabia and Iraq may be a "major downside risk to prices" if the economic crisis worsens, said Citigroup analyst in New York, Edward Morse.
"Saudi Arabia continues to push prices lower" by cutting June official selling price differentials to Asia and increasing output to about 10 million barrels a day, Morse said. "What's most dangerous to prices would be a repeat of conditions in 1997-1998, when Saudi overproduction coincided with an unexpected Asian financial crisis that hit hard at demand."