JOIN USSaudi Arabia to delay oil production hike, straying away from OPEC plans to hike output: Report
Saudi Arabia, one of the largest oil producers in the world is considering to stray away from Organization of the Petroleum Exporting Countries' (OPEC) agreed output plans and not hike oil output early next year, senior Saudi oil advisers told The Wall Street Journal. This comes at a time when Libyan crude oil is expected to make a return, increasing stockpiles of global oil supply.
In April this year, OPEC led by Saudi Arabia and 10 Russia-led producers decided to carry out production cuts at record levels of 9.7 million barrels a day after Covid-19 battered economies around the world, grounding flights, halting public transportation in its tracks and shuttering industries.
The April plan had decided that producers would return to regular production gradually, in stages of two million barrels of additional crude per day, every six months, assuming that the pandemic would fade before the end of 2020. Earlier, in the summer of this year, OPEC moved ahead with the first increase in output. The next extra two million barrels a day were expected to start flowing in January.
Saudi Arabian oil advisers are now saying that Saudi Arabia is considering postponing the output hike until the end of the first quarter 2021. “The market can’t take another two million barrels a day,” one adviser told the publication. The country is the largest OPEC producer and has in the past acted unilaterally, says the report.
Advisers also told the website that there were concerns about Libya’s oil production flooding the market, which is staging a return after the end of a shutdown that lasted about eight months with the rebel factions settling to an agreement. The country's output has tripled to about 300,000 barrels a day in two weeks.
The report, however, stated that no final decision has been taken yet and that a delay needs to be sanctioned by OPEC members at the next meeting on November 30 and December 1.