Saudi Arabia decided yesterday to increase its oil supplies by more than 25 percent, by 2.5 million barrels per day, as it will reach 12.3 million barrels per day early April next, while its average production reached about 9.8 million barrels per day in 2019, according to OPEC data.
According to the analysis of the reports unit in the "Al-Iqtisadiah" newspaper, based on data from the Saudi Ministry of Energy, the expected Saudi production in early April is the highest historically based on the annual comparison, as the average annual production of Saudi Arabia has never reached this level before.
Aramco announced that it will provide its customers with 12.3 million barrels per day, an increase of 300 thousand barrels per day over the maximum sustainable capacity of 12 million barrels per day.
The company said in a statement on the "Tadawul" website, that it was agreed with its clients to provide them with these quantities starting from the beginning of next April, expecting a positive financial impact for this step in the long term.
Once this is achieved, Saudi oil supplies will surpass Russia, with Moscow's production reaching 10.77 million barrels per day in 2019, and if it is increased by 500,000 barrels per day (according to press statements), its production will reach 11.27 million barrels, which is less than Saudi supplies by about one million barrels per day.
Accordingly, Saudi Arabia will become the second largest oil producer in the world behind the United States, which produced 12.37 million barrels per day in 2019.
The Saudi decision to increase supplies comes after the failure of the "OPEC +" agreement to reduce additional production by 1.5 million barrels per day as a result of Russia's refusal. The proposal to cut additional production aims to cope with the negative repercussions of the expected virus Corona on the emerging global economy.
Saudi oil production
As for the development of the average daily production for Saudi Arabia, it has multiplied by about six times and increased by 498% during the period from 1962 to 2019, where the average daily production in 1962 was about 1.64 million barrels per day.
Ten years later in 1962, Saudi production exceeded six million barrels per day at 6.02 million barrels per day in 1972, then exceeded seven million barrels per day the following year directly at 7.60 million barrels per day in 1973, then exceeded eight million barrels in the following year to reach 8.48 Million barrels per day in 1974.
After two years, Saudi production exceeded nine million barrels per day, to reach 9.20 million barrels per day in 1977, and since then until the end of 2014 production did not reach ten million barrels per day as an average annual production, but it exceeded it in 2015 with a production of 10.19 million barrels Daily.
In 2016, Saudi Arabia recorded the record annual level of production at 10.46 million barrels per day, while production later fell to 9.96 million barrels per day in 2017 on the signing of commitment to the "OPEC" agreement to reduce production to restore stability to the world oil market.
Saudi Arabia production increased again in 2018 at 10.32 million barrels per day, while it decreased to 9.81 million barrels per day in 2019.
For its part, Brent crude contracts for May delivery next month extended their gains at 1:45 pm Saudi time (10:45 am GMT) to about 10 percent ($ 3.4) at $ 37.74 a barrel.
According to Al Eqtisadiah’s analysis, this is the highest daily rally in oil since September 16, 2019 (i.e. within about six months) when it rose by about 15 percent in conjunction with the attack on two Aramco facilities.
Oil prices opened last Tuesday at an increase of 8.3 percent, in light of the positive news about the incentives promised by US President Donald Trump to support the largest economy in the world in the face of the emerging Corona virus, in addition to the slowing of the spread of the virus globally.
The rise in oil comes on Tuesday after declining yesterday by 24 percent, closing at 34.3 dollars, the highest daily decline in 29 years (since January 17, 1991).
Prices fell by more than 30 per cent at the beginning of Monday's trading, and during four sessions, oil lost about a third of its value, as it had closed at $ 51.86 in the third session of March.
The most significant drop in Brent crude prices was recorded in 1991 when prices collapsed by about 35 percent on January 17 of the year, the day that Kuwait’s liberation from Iraq or the second Gulf War began.
* Economic Reports Unit