Saudi oil aid reflected in market price drop

By Hilton Price 

The price of crude oil futures dropped for the first time in days Friday morning, as fears of oil shortages were eased by promises from Saudi Arabia to ramp up production. The Saudi increase comes on the heels of an embargo against Iranian oil that has many countries in Europe and Asia turning away from the embattled nation’s supplies.

Crude futures slipped below $125 a barrel Friday morning. Prices had pushed above $128 on Thursday, one of several record setting days for this time of year. Reports of a pipeline fire in Saudi Arabia guided the Thursday boost, but the promise of more oil from the nation helped ease that increase.

Saudi Arabia announced in February it would increase oil production to meet the demand increase caused by the embargo. The increase even includes a production start on a previously closed field, Saudi Aramco’s Dammam. The field is said to have a good substitute for Iranian crude.

The embargo against Iran stems most recently from the country’s pursuit of a nuclear program. Before that, tensions were high when the nation threatened to close the Strait of Hormuz, a vital shipping pathway for crude oil. Once the embargo against Iran was announced, the country attempted a pre-emptive refusal to sell oil to some European countries. That left Iran with unsold oil, which the country is still attempting to unload.

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