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Saudi Aramco will maintain oil volumes to clients in Asia despite the recently agreed OPEC+ production cuts, Reuters has reported, citing unnamed sources in the know.
OPEC+ agreed to implement a nominal production cut of 2 million barrels daily, with the actual output reduction at between 1 million bpd and 1.1 million bpd, according to Saudi energy minister Abdulaziz bin Salman.
Most of the reduction will be implemented by Saudi Arabia, the UAE, and Kuwait. Most of the other members of the extended alliance are already producing below their targets.
Following the news, some worried that Aramco would increase its export prices but for now the company is keeping prices unchanged. The price for flagship Arab Light in November was left at the same level it was for October loadings, for Asian clients.
Aramco also lowered the price of Arab Light for European buyers for November but raised it for U.S. clients. The prices of Arab Medium and Arab Heavy were raised by $0.25 per barrel from October.
While oil-buying nations are worrying about the price of crude, however, Aramco’s chief has warned the world’s production capacity is dwindling.
“If China opens up, [the] economy starts improving or the aviation industry starts asking for more jet fuel, you will erode this spare capacity,” Amin Nasser said, speaking at the Energy Intelligence forum earlier this month, as quoted by the FT
“And when you erode that spare capacity the world should be worried. There will be no space for any hiccup — any interruption, any unforeseen events anywhere around the world.”
Nasser, as well as bin Salman, have been warning for a couple of years now that underinvestment in new oil production could come back to bite those discouraging that investment.
“Even if we decide we are going to increase investment, it is going to be difficult; it will take a number of years,” Nasser also noted at the event.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.