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The world's largest oil company, Saudi Aramco, cannot increase its oil production capacity any faster than it has already promised, the head of Saudi Aramco told Reuters on Tuesday on the sidelines of the WEF in Davos.
Aramco is still planning on increasing its oil production capacity to 13 million barrels per day (bpd)—but that won't be complete for another five years. In the meantime, Saudi Arabia's capacity remains at 12 million barrels per day.
Amin Nasser, the head of Saudi Aramco, said that it could achieve this 13 million bpd goal no faster. "If we could do it before 2027, we would have done it. This is what we tell policymakers. It takes time".
Nasser also had a warning for the oil market:
"The world is running with less than 2% of spare capacity. Before COVID the aviation industry was consuming 2.5 million bpd more than today. If the aviation industry picks up speed, you are going to have a major problem," adding that Russia's invasion of Ukraine only masked what would have happened anyway.
Related: Slew Of New Discoveries Brings UAE Closer To Production Goals
"We were going through an energy crisis because of a lack of investment. And it started to bite following the pandemic," Nasser said.
As for China's slumping oil demand due to its strict Covid lockdowns, Nasser pointed out that that wouldn't last long—and oil demand growth would soon resume as a result.
Saudi Arabia is currently producing 10.346 million bpd as of OPEC's latest Monthly Oil Market Report (MOMR) that showed April data. This is lower than the 10.436 million bpd quota set for the country for April, and much lower than the 12 million bpd capacity that The Kingdom claims to have today.
Saudi Arabia's production quota for May was raised to 10.549 million bpd, and 10.663 million bpd for June.
The Biden Administration was rumored to be seeking to speak with Saudi Arabia's Crown Prince, Mohammed bin Salman, on the subject of oil when the U.S. President visits Saudi Arabia for the GCC meeting next month. The meeting would be the first meeting between President Biden and the Crown Prince—the de facto ruler of Saudi Arabia—since Biden took office.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.