Saudi Arabia, one of the world's largest oil producers, may soon cut oil production, CNN news said on Thursday. The country, which had increased production earlier this year in response to the Libyan crisis, has been eying the resumption of Libyan oil exports as well as gradually rising oil exports from Iraq. Those rising exports, as well as the sluggish global economy, have caused crude prices to fall over the last few months, and Saudi Arabia's own budgetary constraints at home require the Kingdom to support the price of crude at close to $100 a barrel, analysts say. Brent crude — which the price of most oil is pegged to as a result of an oversupply in the US benchmark WTI — has been trading in the $105 to $110 range for the last month. That's down from over $125 a barrel in April. US drivers have gotten a bit of a reprieve as a result. Gas prices have fallen from around $4 a gallon this spring to under $3.50 currently. But for Saudi Arabia, which promised $130 billion in housing subsidies and other social spending in the 2011 budget, this is uncomfortable. “We believe Saudi Arabia now requires oil at $92 a barrel to break even fiscally, up from $60 a barrel in 2008 ...,” Deutsche Bank oil analyst Paul Sankey wrote in a research note earlier this month. The Saudis “will cut production to defend $92.” Saudi Arabia was producing about 9 million barrels of oil a day before hostilities broke out in Libya, according to the US Energy Information Administration. When the Libyan civil war shut down nearly all of that country's 1.6 million barrel-a-day production, Saudi Arabia increased output to nearly 10 million barrels a day. But now Libya's oil is beginning to come back online. It is thought Libya is producing between 300,000 and 500,000 barrels a day. That might rise to a million barrels a day by the middle of 2012. Iraq has also been steadily increasing its production, if slowly. That country, which hold enormous oil reserves, has seen production grow by about 300,000 barrels a day in the last year, according to EIA. It's now producing about 2.6 million barrels a day. Iraq's production is expected to continue rising steadily for years to come as international oil companies like Exxon Mobil (XOM, Fortune 500), BP and Shell revamp the country's oil fields, which suffered from decades of war and embargos.
