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Oil price sinks to 17-yr low as Saudi to raise exports to record levels

Agence France-Presse . Riyadh | Published: 22:57, Mar 30,2020

 
 

Saudi Arabia on Monday said that it would 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 that it would add additional supplies to the global market, deepening a glut.

‘The kingdom plans to raise its petroleum exports by 6,00,000 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 neighbour 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.

‘Estimates for the (oil) demand side are being revised downwards on an almost daily basis, while on the supply side there is still no sign of any reconciliation between Saudi Arabia and Russia’ regarding their price war, Commerzbank said in a client note.

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