Saudi to Raise Oil Exports to Record Levels as Price War Rages
Saudi Arabia said on Monday it will raise its oil exports to a record 10.6 million barrels per day starting from May, escalating a price war with Russia.
Oil prices are languishing at 17-year lows as the coronavirus pandemic threatens a global recession that will send demand plummeting.
Saudi Arabia, the world's top oil exporter, which already announced a sharp production increase for April, said it will add additional supplies to the global market, deepening a glut.
"The kingdom plans to raise its petroleum exports by 600,000 bpd from May, so total exports will increase to 10.6 million bpd," said an official at the energy ministry, cited by the state-run SPA agency.
Saudi Arabia had been exporting around 7.0 million bpd under an output reduction agreement among a 24-member producers' alliance known as OPEC+ which included Russia.
Its Gulf neighbor UAE has also pledged to pump at least one million bpd more from next month.
Riyadh said earlier this month it was raising exports to 10 million bpd in April after a production cut agreement among top producers flopped in early March.
OPEC+ failed to reach an agreement on further production cuts to shore up sagging prices as the coronavirus hit the global economy hard.
In an effort to grab market share, Saudi Arabia immediately announced a substantial increase in its production to 12.3 million bpd and exports to 10 million bpd at the beginning of April.
The energy ministry said it will secure the increase from two sources, by using natural gas in the domestic market to free up oil for export and also as domestic consumption drops because of the coronavirus.
The price of oil struck its lowest levels in more than 17 years on Monday, with Brent North Sea crude tumbling to $22.58 per barrel at one point.
There are warnings that oil could sink even further as storage tanks around the world approach full capacity.