Saudi Arabia and Russia are set to stir up an oil price war as they prepare to boost their crude oil production levels at the beginning of April, after the two oil heavyweights failed to agree to curb their outputs at the OPEC+ meeting last week.
Saudi Aramco, the world’s largest crude oil exporter’s national oil company, said Tuesday that it would provide its customers with 12.3 million barrels per day (bpd) of crude oil starting from April 1.
“LONG-TERM FINANCIAL EFFECT”
That level is “an increase of 300,000 per day over the company’s maximum sustained capacity of 12 million bpd,” according to an announcement it made on the Saudi stock exchange, Tadawul.
The world’s largest crude oil exporter currently produces approximately 9.7 million bpd of crude oil, according to OPEC’s Monthly Oil Market report for February.
Saudi Aramco said in the statement that it expects the decision to ramp up production would “have a positive, long-term financial effect” for the market.
Saudi Arabia, in alliance with Russia since December 2016, formed the group known as OPEC+, and made three oil production cuts to date. The alliance, however, now looks fragile after the two heavyweights failed to agree deeper output cuts, and with Russia signaling Tuesday that it could also increase its crude oil production.
Russian Energy Minister Alexander Novak announced Tuesday on the Rossiya 24 news channel that the country may boost production by 250,000-300,000 bpd in the short term and up to 500,000 bpd in the longer term.