Saudi Aramco to pump more oil
Energy titan Saudi Aramco said Tuesday it will boost crude oil supplies to 12.3 million barrels per day in April, flooding markets as it escalates a price war with Russia. Riyadh had already slashed its price for April delivery after Russia refused its proposal that producer alliance Opec+ orchestrate a co-ordinated cut of 1.5 million barrels per day.
The production cut had been mooted to shore up global prices, which have gone into meltdown as the deadly coronavirus casts a pall over the world economy, but now a rising output indicate an unravelling of OPEC+ co-operation.
“Saudi Aramco announces that it will provide its customers with 12.3 million barrels per day of crude oil in April,” the company told the Saudi stock exchange.
Saudi Arabia, the world’s biggest crude exporter has been pumping some 9.8 million bpd so its announcement on Tuesday means it will be adding at least 2.5 million bpd from April.
“The company has agreed with its customers to provide them with such volumes starting 1 April 2020. The company expects that this will have a positive, long-term financial effect,” the statement said.
Saudi Arabia says it has an output capacity of 12 million bpd but it is not known for how long it can sustain such levels.
The kingdom also has millions of barrels of crude stored in strategic reserves to be used when needed and is expected to use it to provide the extra supply to the global market.
“Production above 12 million bpd shows the Saudis have something to prove,” director of Britain-based RS Energy Bill Farren-Price said.
In a quick response, Russian energy minister Alexander Novak said Moscow could boost production in the short term “by 200,00-300,000 bpd, with a potential of 500,000 bpd in the near future”.
But he stressed that Moscow was in favour of extending a December agreement that had seen Opec and Russia agree to cut production by 500,000 barrels per day in 2020, lowering output from October 2018 levels by 1.7 million barrels per day.
Meanwhile, Russia’s energy ministry will meet with the country’s oil companies on Wednesday to discuss future co-operation with the Opec countries, among other issues, two sources familiar with the plan, according to Reuters.
The meeting was convened following the collapse of talks with Opec and other oil producers last week which spelled the end of three years of co-ordinated output cuts aimed at supporting prices and reducing stockpiles.