Saudi Arabia’s national oil company plans on signing agreements with 10 U.S. companies during President Donald Trump’s upcoming visit to the Kingdom, two anonymous sources told Bloomberg.
Saudi Aramco plans on signing deals with oil-field service companies, including General Electric, Schlumberger Ltd., Jacobs Engineering and Halliburton. Neither Saudi Arabian officials nor U.S. companies responded to Bloomberg’s requests for comment.
Saudi Aramco is the world’s biggest exporter of crude oil and already works with numerous U.S. companies on resource extraction. Saudi Aramco’s market value could be as high as $10 trillion, making it the world’s most valuable company.
The Saudi government may also announce $40 billion in U.S. infrastructure investments during Trump’s visit, the anonymous sources told Bloomberg. U.S. companies, in return, would invest in manufacturing plants in Saudi Arabia, helping to further diversify the Kingdom’s economy away from oil.
The major announcements come as U.S. crude oil production threatens Saudi Arabia’s control of world oil markets. U.S. hydraulic fracturing, or fracking, operations have drastically increased domestic oil production, putting downward pressure on global supplies.
U.S oil production is expected to rise to 5.4 million barrels per day by June, according to the U.S. Energy Information Administration’s (EIA) drilling productivity report. The EIA estimates that the Saudi-led Organization of Petroleum Exporting Countries (OPEC) lost $76 billion in oil revenues in 2016, resulting in the lowest earnings posted by OPEC since 2004.
Soaring U.S. oil production is due to a new agreement between the OPEC and Russia to reduce their oil production with the goal of increasing global prices. With the deal in place, OPEC and Russia have effectively surrendered control of the lucrative U.S. oil market to American companies.
As U.S. oil production increased in recent years, OPEC oil got edged out of the lucrative American oil market. America imported about 60 percent of its oil in 2007, but by 2014, the U.S. only imported 27 percent of its oil, according to government data. The rising U.S. oil production also reduced demand for Saudi oil abroad, keeping prices low.
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