Saudi Arabia pledges to expand oil output capacity

Saudi Arabia ordered state-run oil producer Aramco to boost the kingdom’s output capacity by 1 million barrels a day, the latest escalation in a battle for control of the global petroleum market, Report informs referring to Bloomberg.

While delivering the extra capacity may take years and many billions of dollars in investment, the decision shows that Crown Prince Mohammed bin Salman has little intention of pulling back from his aggressive response to the breakdown of OPEC’s alliance with Russia and other oil producers.

The country’s energy ministry, headed by Prince Mohammed’s half-brother, ordered Saudi Aramco to boost its output capacity for the first time in at least a decade. The world’s biggest oil exporter will raise capacity to 13 million barrels a day from 12 million, it said Wednesday in a statement.

“The company is exerting its maximum efforts to implement this directive as soon as possible,” Chief Executive Officer Amin Nasser said in a separate statement. Aramco didn’t specify when it would reach a higher capacity level or how much investment such an increase would require.

“This is going to take several years,” said Ian Thom, a research director at U.K.-based consultant Wood Mackenzie Ltd. “Four or five years might be a rule of thumb for a big, greenfield mega-project. It might be a little easier if they do some expansion at existing operations -- that might be quicker, but it’s hard to see that generating an additional million barrels a day.”

Saudi Energy Minister Prince Abdulaziz bin Salman returned last week from Vienna without an agreement by the OPEC+ coalition to make deeper cuts in production to help prop up prices. The failure to reach a deal shattered a partnership between the Organization of Petroleum Exporting Countries and producers such as Russia that had regulated much of the world’s oil supply for more than three years.