Oil price war: Saudi Arabia, Russia insist on increasing oil output

Saudi Arabia, on Tuesday, officially made public its plans to unilaterally increase oil output next month, as its state-owned company pledged to supply a record 12.3 million barrels a day, more than 25 per cent higher than last month’s production.

Reliable sources had earlier told Bloomberg of the planned move of the world’s largest oil exporter to massively increase its output from about 9.7 million a day it produced this month.

The news organisation reports that the supply hike puts Aramco above its maximum sustainable capacity, indicating that the kingdom is even tapping its strategic inventories to dump as much crude on the market as quickly as possible.

In response to the price war, Russia Energy Minister Alexander Novak said the country had the ability to boost production by 500,000 barrels a day, putting the country’s output potentially at 11.8 million barrels a day.

Saudi Arabia’s decision to flood the market with as many barrels came after Moscow rejected Organisation of Petroleum Exporting Countries (OPEC) resolve to cut crude oil production by a combined volume of about 1.5 million barrels per day, to stop further reduction in international oil prices.

Since the last meeting of OPEC+, and the inability of the organisation to reach a deal on oil production cuts, oil price in the international market has tumbled.

Yesterday, the oil price reached nearly 30 years of fall as it dropped to $34.36 per barrel.

Nigeria had pegged oil production at 2.18m barrels per day, with a price benchmark of $57 per barrel in its 2020 budget.Faced with the reality of what is on ground, President Muhammadu Buhari, on Monday, set up a committee to assess the impact of the coronavirus epidemic on Nigeria’s 2020 budget and the economy in general.