Saudi Arabia to raise oil output after Opec+ deal collapses

Dubai  — Saudi Arabia, the world’s top oil exporter, plans to raise its crude oil production significantly above 10-million barrels per day (bpd) in April, after the collapse of Opec’s supply cut agreement with Russia, two sources said on Sunday.

State oil giant Aramco will boost its crude output after the deal to curb production between Opec  and Russia — together known as Opec+ — expires at the end of March, the sources with knowledge of the matter said.

The collapse of talks to extend the deal on Friday sent oil prices plunging on speculation Saudi Arabia is scrapping a strategy of supporting prices in favour of a grab for market share, reminiscent of a drive in 2014 that caused crude prices to slump about two-thirds in value.

On Saturday, Aramco slashed its official selling price (OSP) for April for all its crude grades to all destinations.

The sources said April’s production would be significantly higher than 10-million bpd, possibly closer to 11-million bpd. In the past couple of months, Saudi Arabia has been pumping 9.7-million bpd.

Saudi Arabia has an oil output capacity of 12-million bpd, giving it the ability to swiftly increase production.

A three-year pact between Opec and Russia ended in acrimony on Friday after Moscow refused to support deeper production cuts to support prices hit by the coronavirus outbreak. Opec responded by removing all limits on its own output.

Opec+ has been effectively cutting production by 2.1-million bpd, as Saudi Arabia has been reducing its own output by more than agreed.

Russia’s poor compliance with the output cuts has been frustrating Riyadh, Opec sources said.