By Arab News
By Frank Kane
Saudi Arabia pumped more than 12 million barrels of oil on Wednesday for the first time in its history.
The Kingdom has vowed to ramp up production as an oil “price war” shakes the global energy industry following the end of a supply agreement with other producers.
Officials at Saudi Aramco, the world’s biggest oil company, and the Saudi Ministry of Energy, Industry and Mineral Resources told Arab News that crude output on the first day of April — when the OPEC+ agreement to limit supply lapsed — was more than 12 million barrels. Some reports put it at 12.3 million.
The Kingdom’s previous record output was about 11 million barrels, achieved only briefly.
Aramco had pledged to increase its maximum sustainable capacity (MSC) — the level at which it can safely maintain long-term output — to 12.3 million in the coming months; that it has already hit this level is regarded as a measure of its operational efficiency and the Kingdom’s determination to win the battle for market share.
The company released a short video showing laden oil tankers sailing away from Saudi ports. It said it had loaded 18.8 million barrels onto 15 tankers, which would have taken about three days.
Aramco’s strategy of large output increases and significant discounts to customers — labeled a “shock and awe” play by energy experts — has transformed the oil industry. The price of crude oil plunged as demand for energy was hit by the coronavirus pandemic. Some producers, especially in the US where extraction costs are high, are facing financial disaster.
“If Saudi Arabia sustains this, it would be an unprecedented demonstration of their MSC,” said Robin Mills, chief executive of the Qamar energy consultancy. “Assuming that it is production, and not just drawing down on storage, it’s an impressively quick ramp-up.”
It was also notable that production was unaffected by any lingering issues from terrorist attacks last September on Aramco facilities at Abqaiq and Khurais, Mills said.
Despite the flood of oil onto global markets, the Brent crude global benchmark price rose by about 10 per cent toward $25 per barrel after US President Donald Trump said he thought the price was too low, and offered talks with Saudi Arabia and Russia about the global oil glut.
Shares in Saudi Aramco rose for a third consecutive day, up 1.5 per cent to SR30.6.
Thanks for reading Eurasia Review. For more of our reporting make sure to sign up for our free newsletter!