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Saudi giant announces it will increase oil production to record level

The move comes after Russia refused to cooperate on cutting production.

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People walk past a banner showing Saudi King Salman, right, and his Crown Prince Mohammed bin Salman (AP)

People walk past a banner showing Saudi King Salman, right, and his Crown Prince Mohammed bin Salman (AP)

People walk past a banner showing Saudi King Salman, right, and his Crown Prince Mohammed bin Salman (AP)

Saudi Arabia’s state-run oil giant Saudi Aramco said it would increase its crude oil production to 12.3 million barrels a day in April, a record amount.

The move seems to make good on the country’s promise over the weekend to increase output after Russia refused to cooperate on cutting production.

That led to a 25% plunge in the price of crude on Monday, the sharpest decline seen since the 1991 Gulf War.

International benchmark Brent crude traded up over 7% on Tuesday at nearly 37 US dollars a barrel.

In a filing made Tuesday on Riyadh’s Tadawul stock market, Aramco, formally known as the Saudi Arabian Oil Co, said that the increase in production represented a rise of 300,000 barrels per day.

“The company has agreed with its customers to provide them with such volumes starting 1 April 2020,” it said in the filing.

“The company expects that this will have a positive, long-term financial effect.”

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Free-fall in oil prices had caused stock market turbulence on Monday (Richard Drew/AP)

Saudi Aramco shares were up 9.7% in trading Tuesday on the Tadawul to 30.95 riyals, or 8.25 US dollars, giving the world’s most-valuable company a valuation of 1.65 trillion dollars.

It came a day after Aramco shares collapsed by 10% and were pulled from trading for reaching the Tadawul’s maximum permitted loss in a day, dropping its valuation to 1.4 trillion dollars.

Aramco had offered only a sliver of its shares on the Tadawul for investors.

Aramco’s decision likely will flood global energy markets and put further pressure on prices.

The company had reached two trillion dollars in early days of trading in December.

Saudi state television later quoted energy minister Prince Abdulaziz bin Salman as saying the kingdom did not see the need for an Opec meeting in May and June.

“Every oil producer in the free market can take care of their own market share,” the energy minister said, according to state TV.

The lower oil prices come as there’s less demand for air travel amid the spread of the new Covid-19 around the world, further depressing prices.

However, that likely will push down petrol prices at the pump.

PA