Saudi boosts oil output to record level as price war intensifies

Oil-price war between Saudi Arabia and Russia escalates as the kingdom dramatically increases oil exports despite tumbled price. US fails to diffuse tensions between the two oil producers. With oil prices at record 18-year low, this could be a golden opportunity for any state to buy huge amount of crude oil and but can they store it?

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Saudi Arabia boosted crude oil supply to record levels Wednesday, with state giant Aramco offering 18.8 million barrels on a single day despite a global supply glut as a price war rages with Russia.

Aramco’s announcement comes after a deal to limit crude output between the Organization of the Petroleum Exporting Countries (OPEC) and other producers, including Russia, expired on Tuesday.

The move comes despite pressure from Washington, with US President Donald Trump offering on Tuesday to help resolve the price war between Moscow and Riyadh that has sent crude prices plummeting to 18-year lows.

“As the world demands economic stability, Aramco remains committed to supplying the world with energy,” the oil giant said in a statement.

“The company is breaking records to supply 15 tankers loading more than 18.8 million barrels of oil,” it added.

Aramco also released aerial footage of multiple oil tankers being loaded at sea.

The threat of a global recession triggered by the coronavirus pandemic had already hammered prices when Riyadh pledged last month to raise exports after a production-cut agreement among top producers flopped.

 

On Monday, Saudi Arabia said it would increase exports further to a record 10.6 million barrels per day from May, deepening a glut on world markets.

The kingdom, the world’s top oil exporter, had already announced a sharp production increase for April.

Saudi Arabia had been exporting around 7.0 million barrels per day under an output reduction agreement among a 24-member producer alliance known as OPEC+, which included Russia.

OPEC+ failed to reach an agreement on further production cuts to shore up sagging prices as the coronavirus battered the global economy last month.

Trump on Tuesday said he had spoken with his Russian counterpart Vladimir Putin and Saudi Crown Prince Mohammed Bin Salman by phone with the aim of halting the slide.

Analysts say Riyadh is engaged in a deliberate long-term strategy to capture greater market share by pressuring its high-cost rivals.

Read more: Escalating Oil-Price War: Saudi decided to raise oil exports to record levels

The price war has hit shale oil producers in the US, with Trump saying the production dispute threatened “thousands and thousands” of jobs.

In a letter last week to US Secretary of State Mike Pompeo, a group of US senators accused Saudi Arabia and Russia of waging “economic warfare against the United States”.

Can world stock low priced oil for future beneifts?

Countries have stocked enough oil stocks and now they are running out of places to store it .

Italy, and the United Arab Emirates’ tanks have already filled up, for instance. Thousands of tankers, are anchored off Texas, Scotland and across the planet due to lockdowns.

AFP with additional input from GVS News Desk.

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