Saudi to raise oil exports to 10.6 million barrels per day in May

Saudi to raise oil exports to 10.6 million barrels per day in May

access_time2020-03-31 13:14:54

Saudi Arabia said on Monday it will raise its oil exports to a record 10.6 million barrels per day starting from May despite a global supply glut, escalating an oil price war with Russia.


Oil prices have already dropped to 17-year lows as the coronavirus pandemic threatens a global recession that could further sap demand.

Saudi Arabia, the world's top oil exporter which already announced a sharp production increase for April, said it would add additional supplies to the global market.


"The kingdom plans to raise its petroleum exports by 600,000 bpd from May, so total exports will increase to 10.6 million bpd," said an official at the energy ministry, cited by the state-run Saudi Press Agency.


The announcement came as US President Donald Trump, a close ally of the Saudi crown prince, spoke with his Russian counterpart Vladimir Putin on Monday about oil prices.


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


Its Gulf neighbour, the United Arab Emirates, has also pledged to pump at least one million bpd more from next month.


Riyadh said earlier this month it was raising exports after a production cut agreement among top producers flopped in early March.


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


In an effort to secure its market share, Saudi Arabia immediately announced a substantial increase in its production to 12.3 million bpd and exports to 10 million bpd at the beginning of April.


The Saudi energy ministry said it would secure the increase from two sources, by using natural gas in the domestic market to free up oil for export and also as domestic consumption drops because of the coronavirus.


Despite the oil crash piling pressure on the Saudi economy, analysts say its latest moves are part of a deliberate long-term strategy to capture greater market share against competition from oil exporters and shale producers.


US President Donald Trump and Russian President Vladimir Putin agreed during a phone call on Monday to have their top energy officials meet to discuss slumping global oil markets, the Kremlin said.


"Opinions on the current state of global oil markets were exchanged. It was agreed there would be Russo-American consultations about this through the ministers of energy," the Kremlin said in a readout of the phone call.


The United States has grown in recent years into the world's largest oil and gas producer, thanks to a technology-driven shale drilling boom. But the current price of oil is below the production cost of many American drillers. "We don't want to have a dead industry that's wiped out," Trump said in a FOX TV interview Monday. 


The Trump administration is seeking to persuade the world's top oil exporter, Saudi Arabia, to decrease crude output, and will soon send a special energy envoy, Victoria Coates, to the kingdom. In addition to oil and the pandemic, Trump said he and Putin would talk about trade and sanctions the United States has imposed on Russia.

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