Saudi Goes 'Full Betting', Plans to Produce 12.3 Million Barrels per Day... Pressure on Russia

Aramco Chairman "Saudi Arabia Producing 12.3 Million Barrels"
Seems to Release Saudi Stockpiles into Market
WSJ Reports Saudi-Russia Dialogue Resumption Efforts

[Asia Economy Reporter Naju-seok] Saudi Arabia has announced plans to increase crude oil production to an all-time high. After failing to reach a production cut agreement, Saudi Arabia has suddenly declared an increase in production, signaling a full-scale power struggle with Russia and others. However, there remains a possibility of a dramatic resolution in April as Saudi Arabia is reportedly holding back-channel talks with Russia.

On the 10th (local time), Amin Nasser, CEO of Saudi state-owned oil company Aramco, stated, "We will raise daily crude oil production to 12.3 million barrels next month." This indicates a strong response to the price war that began after the production cut agreement collapsed.

Foreign media have suggested that considering Saudi Arabia's previous maximum crude oil production was 12 million barrels, Saudi may release crude oil from its reserves into the market. Until now, Saudi Arabia had been producing 9.7 million barrels per day, with the additional amount stored separately during this period.

Russia has also expressed a stance to increase production. Russia's state-owned oil company Rosneft has announced plans to increase daily crude oil production by 300,000 barrels. Russia also indicated that it might raise the increase to 500,000 barrels.

As Saudi Arabia and Russia show a direct confrontation, oil prices have been fluctuating sharply between steep declines and rapid rises. After a 20% drop on the 8th, the oil market rebounded by over 10% on the 9th. The market has fallen into confusion as oil-producing countries push for production increases rather than cuts amid a significant drop in crude oil demand due to the novel coronavirus (COVID-19).

Although Saudi Arabia and Russia are showing signs of direct confrontation, there is also speculation about the possibility of dialogue.

[Image source=Reuters Yonhap News]

The Wall Street Journal (WSJ), citing Saudi government officials, reported that Khalid Al-Falih, former Saudi Energy Minister and current Minister of Investment, is discussing with Alexander Novak, Russian Energy Minister, the withdrawal of the production increase plan and the restoration of consultation channels between the Organization of the Petroleum Exporting Countries (OPEC) and Russia for oil supply and demand control.

When the consultation channel for oil supply and demand was established with Russia in 2016, Minister Al-Falih led the negotiations with Russia and others. WSJ reported that Al-Falih's negotiations are proceeding with the approval of the Saudi government, but the government has not officially confirmed the existence of the negotiation channel.

Saudi officials believe that if Minister Al-Falih's negotiations succeed, official talks between OPEC member countries and Russia could be held as early as next month.

Earlier, Minister Novak also left open the possibility of cooperation with OPEC. Regarding the meetings with OPEC member countries that could be held in May or June, he said, "The door is not closed."

The United States and others are also taking action. According to the White House, U.S. President Donald Trump held a phone call with Saudi Crown Prince Mohammed bin Salman and others to discuss global energy issues.

This content was produced with the assistance of AI translation services.