• 4 minutes Ten Years of Plunging Solar Prices
  • 7 minutes Hydrogen Capable Natural Gas Turbines
  • 10 minutes World looks on in horror as Trump flails over pandemic despite claims US leads way
  • 13 minutes Large gas belt discovered in China
  • 36 mins Thugs in Trumpistan
  • 26 mins Model 3 cheaper to buy than BMW 3 series.
  • 1 hour Would bashing China solve all the problems of the United States
  • 4 hours Pompeo's Hong Kong
  • 50 mins Renewables Overtake Coal, But Lag Far Behind Oil And Natural Gas
  • 20 hours China To Boost Oil & Gas Exploration, As EU Prepares To Commit Suicide
  • 2 hours Natural gas is crushing wind and solar power
  • 12 hours China’s Oil Thirst Draws an Armada of Tankers
  • 2 hours Coronavirus hype biggest political hoax in history
  • 4 hours Chicago Threatens To Condemn - Possibly Demolish - Churches Defying Lockdown
  • 11 hours Yale University Epidemiologist Publishes Paper on Major Benefits of Hydroxchloroquine for High-risk Outpatients. Quacksalvers like Fauci should put lives ahead of Politics
  • 6 hours Michael Moore's Controversial "Planet of the Humans" Movie
  • 7 hours The CDC confirms remarkably low coronavirus death rate. Where is the media?
Oil And Gas Rig Count Falls For Ninth Straight Week

Oil And Gas Rig Count Falls For Ninth Straight Week

Baker Hughes reported on Friday…

The Future Of Wind Energy

The Future Of Wind Energy

Two of the biggest problems…

Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

More Info

Premium Content

Saudi Arabia To Flood Oil Markets With An Extra 2.6 Million Bpd

Saudi Arabia plans to increase its crude oil production from below 10 million bpd currently to 12.3 million bpd next month, the company said in a filing with the Saudi stock exchange.

According to the filing, Aramco “will provide its customers with 12.3 million barrels per day (MMBD) of crude oil in April; i.e., an increase of 300 thousand barrels per day over the Company’s maximum sustained capacity (MSC) of 12 MMBD.”

Yet, according to data cited by Reuters a day earlier, the Kingdom was pumping just 9.7 million barrels daily at the moment, in over-compliance with its OPEC+ commitment that was thrown out the moment Russia refused to take part in deeper cuts.

Reuters yesterday reported, quoting unnamed sources, that Saudi Arabia had plans to boost production above 10 million bpd in April. The source said April production will be much higher than 10 million bpd, maybe close to 11 million bpd.

Yet according to the filing quoted by the AP, “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.”

This weekend, after the OPEC+ talks ended in divorce, Saudi Arabia announced it will slash its official selling prices for crude by between $6 and $8 per barrel, effective from April. The biggest discounts were offered to buyers in northwestern Europe and the United States. Related: Why Russia Is Rooting For Bernie Sanders

Whether Saudi Arabia will boost production to 11 million bpd or 12 million bpd inside a month remains to be seen but the world is definitely heading into a deeper glut: Russia will start pumping more from April, too.

“As from 1 April we are starting to work without minding the quotas or reductions which were in place earlier,” Energy Minister Alexander Novak said on Friday, adding “but this does not mean that each country would not monitor and analyze market developments.” 

At the time of writing, Brent crude was trading at $37.63 a barrel, with WTI at $34.25 a barrel, both up by around 10 percent from yesterday’s close on the news of more economic stimulus and the decline in the number of new Covid-19 cases in China.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:

Download The Free Oilprice App Today

Back to homepage

Leave a comment
  • Mamdouh Salameh on March 10 2020 said:
    Saudi Arabia is deluding itself by claiming that it could flood the global oil market with an extra 2.6 million barrels a day (mbd).

    Saudi Arabia can’t raise its oil production to 12.3 million barrels a day (mbd) under any circumstances. Its claim of having a production capacity of 12.5 mbd has never been tested. Moreover, Saudi oil production is in decline having peaked at 9.65 mbd in 2005. Saudi Arabia can produce some 8.0-9.0 mbd with another 700,000 barrels a day (b/d) to 1.0 mbd coming from stored oil on tankers or underground.

    Saudi Arabia would have learned nothing from the recent past if it is considering flooding the global market in the aftermath of OPEC+ failure to agree deeper production cuts. It will end up in a similar fiasco to the one in 2014 when it flooded the market in the aftermath of the oil price collapse and was forced to discard its discredited policy having inflicted huge and severe damage on its economy.

    The Saudis were angered by Russia’s decision to refuse any deepening of production cuts by OPEC+. However, Russia’s decision was logical. I have been repeatedly saying in my comments to oilprice.com that any new production cuts or a deepening of existing ones by OPEC+ is futile as they will have no positive impact on oil prices while the coronavirus outbreak is raging. They will only lead to more loss from OPEC’s market share. Once the outbreak is contained, both global oil demand and prices will recoup all their losses.

    Moreover, Saudi Aramco’s reducing oil prices to its customers will neither enhance its market share while the outbreak is raging nor harm Russia. Russia’s economy can live with an oil price of $30-$40 a barrel for many years compared with $85 or much higher for Saudi Arabia and the majority of OPEC members.

    The largest loser of the recent oil price debacle is the global economy and within the global economy US shale oil industry and Saudi Arabia are the two biggest losers. It is not Russia which will suffer.

    US shale oil drillers are already very heavily indebted. They will pay a heavy price since they will be producing shale oil at almost half their breakeven price estimated at $70 a barrel. Still, they may continue production on the probability that the US government will eventually bail them out rather than see a total collapse of the US shale oil industry. Still, the US shale oil industry will be no more in 4-9 years from now.

    Saudi Arabia’s budget deficit will mushroom hugely impacting very adversely on its economy and also on Saudi Aramco’s share prices.

    One thing Saudi-led OPEC can do at this moment is to wait the end of the coronavirus outbreak. Another thing is to resume cooperation with Russia for the benefit of the global economy and also the stability of oil prices.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News