Saudi Arabia, the world’s largest oil producer, plans to increase oil output in the coming months as a nearly year-long recovery in oil prices is giving the Kingdom confidence that the market has improved enough to reverse a recent big production cut, the Wall Street Journal reports.
Saudi Arabia orchestrated a comeback for the commodity after a significant price fall in early 2020 as the pandemic gripped the global economy and a price war drove the price of oil on the Brent crude index to just $19 a barrel in April. After a steady comeback since then, and a 50-percent jump in oil prices over the past three months, Brent crude futures reached $63.40 today.
Oil has recovered from April 2020 lows.
The kingdom plans to announce that it will raise production when a coalition of oil producers meets next month, advisers told the WSJ, in light of the recent recovery in prices. The output rise won’t kick in until April. The WSJ added that the advisers “cautioned the plans could still be reversed if circumstances change, and the Saudis’ intention hasn’t yet been communicated to the Organization of the Petroleum Exporting Countries, said the people and OPEC delegates.”
“We are in a much better place than we were a year ago, but I must warn, once again, against complacency,” Prince Abdulaziz bin Salman, the Saudi energy minister, said at a conference Wednesday. “The uncertainty is very high, and we have to be extremely cautious.”
The OPEC+ group of countries, lead by Saudi Arabia, includes Russia. The group is currently withholding just over 7 million barrels a day — or about 7% of world supplies — and is committed to restoring about 1.5 million barrels in stages over the course of this year, depending on market conditions, according to a report in rigzone.com.
Saudi Arabia’s Crown Prince Mohammed bin Salman and Russia’s Vladimir Putin spoke this week by phone. Saudi Arabia and Russia “agreed to continue coordinating to support the stability of oil markets and the growth of the global economy,” the SPA said this week, confirming the two discussed OPEC+ matters.
They said they would continue close coordination between Russia and Saudi Arabia “in the interests of maintaining stability in the world energy market,” the Kremlin said in a statement.
