Saudi Aramco will boost its oil production capacity to 13 million barrels a day (mbpd) from 12 million, the company said in a statement Wednesday.
Saudi Aramco announced that it received a directive from the Ministry of Energy to increase its maximum sustainable capacity (MSC) to 13 million, one million barrels more than earlier. In fact, it now looks to be ready to escalate tensions with Russia even further with a higher output.
Following Monday vermillion, Saudi Arab oil giant issued a statement to Tadawul that MSC is determined by the State. The details are laid in the Hydrocarbons Law, issued by Royal Decree M/37 on 20/12/2017.
Over the decades, the oil market has been largely regulated by the Organisation of Petroleum Exporting Countries, the oil cartel. Through that time, OPEC acted as swing producers, upping output at times of scarcity and reducing it at times of lower demand, to keep prices stable.
Since Wednesday, Saudi Aramco is set to supply its customers with 12.3 mbpd of crude oil in April, an increase of 300,000 barrels per day from the maximum sustained capacity of 12 mbpd, Argaam earlier reported.
To summarize, increasing MSC is the latest manoeuvre in what’s set to be a long and bitter price war between Moscow and Riyadh. On Monday benchmark oil prices fell more than 20%, the largest one-day drop since the Gulf War in 1991, creating mayhem in equity and bond markets globally.
Following Monday market rapid changes, Washington and other Western countries are starting to worry about the oil price war between two of the world’s most powerful petroleum nations. On Monday, the U.S. Department of Energy denounced in a rare statement “attempts by state actors to manipulate and shock oil markets”.
Even as both sides ramped up production and the war of words, the Russian Energy Minister Alexander Novak said the door is still open to the future negotiation. He said also OPEC+ could meet in May or June.
“The Russian oil industry has a high-quality resource base and a sufficient margin of financial strength to remain competitive at any forecast price level, as well as maintain its market share,” Mr Novak was quoted as saying on the Russian government’s official website.