Oil prices cheered on Wednesday following the EIA's report that crude oil inventories in the United States had drawn down by almost 11 million barrels. But the levity among the bulls may soon be over as Kuwait and Saudi Arabia announced that they have had further discussions about their cooperation in the jointly owned fields known as the Partitioned Neutral Zone.
Saudi Arabia's minister of state for energy affairs met with Kuwaiti officials, according to KUNA, and discussed oil production in the southern neutral zone, to commence after technical issues are put to bed on both sides.
The shared oil fields can produce a half a million barrels of oil per day.
Talks between Kuwait and Saudi Arabia on the joint fields began last month in hopes of putting the old territorial dispute behind them in order to exploit the oil riches in the shared field. Production has been shut in in the field since the end of 2014.
Kuwait has set its sights on increasing its oil production by 4 million barrels per day by 2020, despite the OPEC+ agreement that is currently restricting production. To achieve this higher level of production, Kuwait would need to pump oil from the neutral zone. But that's not all it will need.
Kuwait is also looking to come to a similar understanding with its other neighbor, Iraq. Those countries share a nuetral zone as well. In June, Kuwait's oil minister announced that an agreement with Iraq is in the works, according to KUNA.
Oil prices soured on the news, after perking up earlier in the day. WTI fell back to $55.90 by 4:30pm, a drop of 1.53%. Brent crude had fallen back to $63.18, a loss of 1.02% for the day.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group. More
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