As the coronavirus outbreak is declared a pandemic by the World Health Organization, Saudi Arabia and the UAE announced they are increasing crude supply to the market in April by around 3 million barrels per day (Mmbpd), Kallanish Energy reports.
Saudi Aramco’s CEO Amin Nasser said Wednesday he was instructed by the Saudi oil ministry to increase the company’s production capacity to 13 Mmbpd from the current 12 Mmbpd “as soon as possible.”
On Tuesday, the Saudis said they were lifting crude production and would put around 12.3 Mmbpd of supply in the markets next month. That’s roughly 2 Mmbpd above its current production and 300,000 Bpd over its production capacity, which means Aramco will dip into stockpiles.
UAE’s Adnoc announced yesterday it’s “far stronger and better positioned to respond to current market conditions,” and will supply 4 Mmbpd of crude in April. The company is planning to accelerate its plans to reach 5 Mmbpd production capacity and will shortly announce forward prices for March and April “to give consumers price visibility so they can plan accordingly.”
The UAE, a Saudi ally within Opec, currently produces around 3.3 Mmbpd.
“We are disappointed that no agreement was reached by Opec+ and the current declaration of cooperation will therefore expire at the end of March 2020,” said UAE’s energy minister Suhail Mohamed Al-Mazrouei, in a separate statement.
He added that Opec and Opec+ played an important role in delivering market stability, and “a new agreement is essential to support a balanced and less volatile market.”
The news put further downside pressure on crude prices, with futures dropping around 3% on Wednesday. Brent was trading at roughly $36 a barrel in London, and WTI trading at about $33/Bbl in New York.
Further bearish outlook came from Opec’s monthly oil report, which estimated global oil demand to grow by just 60,000 Bpd this year as the Covid-19 pandemic is expected to slow down the global economic growth and oil consumption. Total crude demand worldwide is now forecast at 99.73 Mmbpd.
This post appeared first on Kallanish Energy News.
