Saudi Arabia has told refiners it plans to supply 12.3 million barrels a day in April 2020/Shutterstockby Bloomberg
Saudi Arabia plans to boost oil exports even further from April to May 2020, reaching a record of more than 10 million barrels a day as the Kingdom taps a new field.
The increase in shipments of about 250,000 barrels a day shows that Saudi Arabia is determined to carry on with its policy of pumping flat out after its alliance with Russia collapsed. Saudi Arabia and Russia are engaged in an oil price war that has sent Brent crude, the global benchmark, below $30 a barrel and prompted energy companies including Exxon Mobil to plan for big spending cuts.
The energy ministry state that Saudi Arabia will utilise the gas produced from the Fadhili gas plant to compensate for around 250,000 barrels a day of domestic oil consumption, which will enable the Kingdom to increase its crude exports during the coming few months to exceed 10 million barrels a day.
Saudi Arabia has told refiners it plans to supply 12.3 million barrels a day in April 2020, a record, although the Kingdom hasn’t said how much oil it will export during the month.
The new gas plant will help Saudi Arabia boost exports above that level.
Russia, Saudi Arabia and several other members of the Organisation of Petroleum Exporting Countries are boosting their exports just as global oil demand suffers a historic contraction due to the coronavirus pandemic.
In a sign that Saudi Arabia is preparing for a long battle, despite the heavy economic cost, Saudi Aramco indicated that the Kingdom could withstand cheap oil.
Khalid Al-Dabbagh, the Finance Director of Saudi Aramco, said, “We are very comfortable with $30, in a nutshell, Saudi Aramco can sustain very low oil prices and can sustain it for a long time and that is, especially the case compared to others in the sector.”
With the price war showing no sign of abating and demand falling, Wall Street is slashing its oil forecasts. Goldman is now predicting that Brent will average $20 a barrel during Q2 2020.
Oil traders privately say the benchmark could even drop into the single digits to force some producers to shut down their wells—that is something that hasn’t happened since the industry downturn of 1997 to 1999.