The price of a barrel of oil in the United States dropped to below $100 for the first time since July, after an agreement between President Barack Obama and Congress to end the government shutdown. It also took place after markets determined that there was sufficient supply from Saudi Arabia and other OPEC countries, and after news about possible progress in talks between Iran and the G6 over Tehran's nuclear program, even though there was no breakthrough in the content of these discussions during the first round with Iran's new foreign minister, Jawad Zarif. However, the price of Brent oil in London markets (the primary international market) remained in the $105-106 range, and brokers in oil markets do not expect a drop in the price of Brent, for a number of reasons. These include the security problems in Libya, where the control over oil wells by armed groups has led to a large drop-off in exports. The chaos in Libya is not reassuring; it is not a temporary phenomenon but looks set to continue, as long as there is no true national military force, or police in the full sense of the word. There are also problems in Nigeria, a big oil country that has constantly experienced instability in its oil sector. Also, the international sanctions on Iran have had a great impact on that country's oil production, which has dropped by more than 1.5 million barrels a day ever since the sanctions regime was imposed. Saudi Arabia's production will remain at the level of about 9-10 million barrels a day, as long as there is a bit of shortfall from OPEC countries. As long there is a need for these quantities, Saudi Arabia will continue to pump to supply markets with their oil needs. Despite everything that is being said about America's energy independence from Middle East oil, the head of ARAMCO, Khaled al-Faleh, says that world demand for oil will increase by 20 million barrels over the next two decades, and affirms that oil and gas will remain at the forefront of sources of energy. Al-Faleh said at an international conference in South Korea that ARAMCO has increased its annual investments from $4 billion to $40 billion, in order to continue to preserve surplus production capacity by more than 2 million barrels a day, to meet any emergency. Saudi Arabia is the biggest OPEC producer and it plays a key role in world markets, as it prevents any shortfall in markets that would have a negative impact on the global economy. Whatever is said about America's independence from Middle East oil, the role of the Kingdom will remain central in terms of helping the stability of the global economy. It also seeks to prevent the level of oil prices from rising dramatically or falling to the point that they negatively affect oil producing countries and their economies. There is a big challenge faced by Saudi Arabia domestically, namely the huge level of oil consumption by its electricity plants, because the quantities of gas are insufficient to be used in this sector. Saudi Arabia consumes domestically between 600,000 and 800,000 barrels of oil production annually, in order to produce electricity. It consumes around 3 million barrels a day domestically, which is the total local consumption, representing a huge annual increase if the country does not economize its domestic consumption. ARAMCO has gotten involved in investment projects to dig for and produce shale oil, which are high-cost investments, but its domestic consumption of crude is also very expensive over the long term. ARAMCO has warned several times about the need to increase the price of electricity to limit the waste in consumption. The challenge of domestic consumption in Saudi Arabia is real and should be treated urgently, because the country's annual growth does not help the oil sector, the basis of the national economy. Officials in Saudi Arabia's energy sector acted quickly to invest in shale gas, because they are aware of this big challenge. But there should be truly huge efforts to make tangible steps taken for the local energy economy. Saudi Arabia has exceeded the consumption level of Brazil, even though it has a much smaller population. Rationalizing Saudi Arabia's oil policy at the level of international markets and the global economy should face up to the treatment of this big domestic challenge, to limit local energy consumption and ensure that there is no waste of this strategic source of energy for the biggest country in OPEC.
