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Significance
The failure of OPEC+ talks in March aiming to agree a response to reduced demand because of COVID-19 resulted in a price war and aggressive Saudi plans to ramp up output. State oil firm Aramco promised to boost supply to the market from about 9.7 million barrels per day (bpd) in February to 12.3 million in April. It was also instructed to increase maximum sustainable output from 12 million bpd to 13 million bpd.
Impacts
The capacity increase would cost 20-30 billion dollars, which may be difficult to allocate amid competing financial demands.
Export capacity is well above the required level, and Aramco has chartered tankers in addition to its own fleet.
If Riyadh sustains these elevated output levels, higher-cost producers could struggle to compete.
Keywords:
Saudi Arabia,
ME/NAF,
OPEC,
Russia,
United States,
economy,
industry,
energy,
oil,
international relations,
foreign policy,
foreign trade,
prices,
Fossil fuels
© Oxford Analytica 2020. All rights reserved. This content contains general information about geopolitical, macroeconomic and social developments or (where stated) other matters. It does not contain advice or recommendations that may be relied on. Where links to external websites are provided, this does not indicate that Oxford Analytica or Emerald agree with, endorse or have checked for accuracy the contents of said sites.
2020
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