RIYADH: Energy titan Saudi Aramco said today it will boost crude oil supplies to 12.3 million barrels per day (bpd) 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 coordinated 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 corona-virus casts a pall over the world economy, but now price cuts and rising output indicate an unravelling of Opec+ cooperation.
“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 today 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.
“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.
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.
Novak said he did not rule out joint measures with Opec to stabilise the market, adding that the next Opec+ meeting was planned for May-June.
But in response, Saudi Arabia’s energy minister told Reuters he did not see a need to hold an Opec+ meeting in May-June if there was no agreement on what measures should be taken to deal with the impact of the coronavirus on oil demand and prices.
The Saudi price cuts over the weekend, which were the first salvo in the price war, sent oil prices crashing – registering the single biggest one-day loss in three decades on Monday.
Meanwhile, oil prices jumped by around 8% today a day after the biggest rout in nearly 30 years as investors eyed the possibility of economic stimulus and Russia signalled that talks with Opec remained possible.
Brent crude futures were up US$ 2.80, around 8%, to US$ 37.16 a barrel by 1354 GMT, after hitting a session high of US$ 38.22 a barrel. West Texas Intermediate crude gained US$ 2.42, or around 8%, to US$ 33.55 a barrel, after hitting a high of US$ 34.60. – Agencies