Saudi Aramco says to hike output, escalating price war
Riyadh, Mar 10 : 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 oil prices, which have gone into meltdown as the deadly new coronavirus casts a pall over the world economy, but now price cuts and 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 said in a statement to 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.
“This is a grab for market share. The taps are open and the prices have been cut sharply,” Farren-Price told AFP.