Saudi Arabia will spend US$20 billion on boosting its oil production capacity in the coming years, Energy Minister Khalid al-Falih said, as quoted by Reuters. Earlier this week, the Kingdom's top oil man said, during the Russia Energy Forum in Moscow, that the country was pumping 10.7 million bpd, with current production capacity standing at 12 million bpd, as per the Reuters report.
These numbers mean that OPEC's biggest producer and exporter has spare capacity of 1.3 million bpd, based on the self-reported September production figure, which might add anxiety to an already distressed market that has recently begun to question Saudi Arabia's ability to boost oil production enough to offset the drop in supply widely expected after the entry into effect of U.S. sanctions against Iran, OPEC's third-largest producer.
The investment pledge will do little to assuage the worry: optimists believed Saudi Arabia has the capacity ready and waiting to be deployed within months, although skeptics warned boosting production from the current level would take a lot longer than just a few months. Still, with August production at 10.42 million bpd, if the September figure is confirmed by external sources, it would mean a pretty quick ramp-up of almost 300,000 bpd.
However, according to the monthly Reuters survey of OPEC supply, Saudi Arabia pumped 10.53 million bpd in September, up by just 50,000 bpd from August, when Reuters estimated it had produced an average 10.48 million bpd. OPEC's secondary sources put Saudi Arabia's oil production in August at 10.4 million bpd. OPEC will release the September production figures next week.
Also in Moscow, Al-Falih said the Kingdom will continue pumping more this month and in November, in line with earlier statements made in a bid to calm down an increasingly distressed market. The current oil production rate of the Kingdom is the highest on record after the 10.72 million bpd reported for November 2016, two months before the OPEC+ production cut agreement went into force.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More
Russia Discovers Massive Oil and Gas Reserves in British Antarctic Territory
Aramco’s Q1 2024 Results: Saudi Arabia is at a Dangerous Tipping Point
Groundhog Day for OPEC+
Oil Prices Remain Rangebound but a Breakout May Be Coming
The U.S. Battery Boom Is Revolutionizing Renewable Energy