Oil price wars rage on as Saudi oil output increases
March 10, 2020
Aramco will boost its crude output by 300,000 barrels a day from the beginning of April, taking the overall daily figure to a record 12.3 million, the Saudi Arabian state-run oil firm announced Tuesday.
The decision appears to be in direct response to a dispute with Russia over the Kremlin's refusal to cooperate on cutting production, which precipitated a near 30% plunge in the price of crude oil on Monday, the biggest slump since the Gulf War in 1991.
In an apparent tit-for-tat measure, Russia said it was considering an increase in its crude oil output.
Peak production
In a filing made on Riyadh's Tadawul stock market, Saudi Aramco remarked on its record hike: "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."
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Aramco shares increased 9.7% Tuesday, to 30.95 riyals ($8.25), meaning the world's most valuable firm is worth $1.65 trillion (€1.45 trillion), just a day after it was valued at $1.4 trillion (€1.23 trillion), following a 10% drop in its share price.
It is predicted that the drastic increase in oil output will flood global energy markets and place further pressure on prices.
Tit-for-tat
Meanwhile, Russia responded by announcing it was considering inflating its oil production by a similar amount to Saudi Arabia's state run company, despite concerns by the Organization of the Petroleum Exporting Countries (OPEC) over falling prices due to the coronavirus outbreak.
Russia has close relations with OPEC, without being a fully fledged member, but the organization has been trying to reel in oil output as part of efforts to increase prices. However, now both Russia and Saudi Arabia would appear to be defying those endeavors, particularly since last week's failed attempt to broker an agreement on cutting production.
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Russian Energy Minister Alexander Novak said in comments carried by state news agency TASS: "I think that in the short term we can increase by 200,000-300,000 barrels ... in the near future 500,000 barrels."
Nevertheless, Moscow was willing to offer an olive branch. Novak said "the doors are not closed" regarding a possible deal being struck with OPEC.
jsi/aw (AP, AFP, dpa)
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