January 26, 2024
On Tuesday 30th January, 2024, the government of Saudi Arabia ordered its state oil company Aramco to suspend its oil expansion plan and to target a maximum sustained production capacity of 12 million barrels per day (bpd), which is one million bpd below the target announced in 2020.
The action comes after eight OPEC+ oil producers agreed to voluntarily produce cutbacks of around 2.2 million barrels per day for the first quarter of 2024. This is in order to sustain prices and stabilise the market. This number includes an extension of the Saudi voluntary, since the government said that it will continue with the one million barrel per day decrease that was agreed on in 2023.
The world’s largest crude exporter said in a statement that the Saudi Ministry of Energy had ordered it to maintain its Maximum Sustainable Capacity (MSC) at current levels. It received a directive to increase production capacity to 13 million barrels per day by 2027.
Saudi Aramco did not reveal the rationale for the ministry’s decision and said that it will revise its capital-spending plan when its full-year 2023 results are reported in March.
The announcement on Tuesday came amid increasing concerns about the prospects for oil consumption globally, given a developing global shift towards decarbonisation that throws a shadow over long-term investment projects in fossil fuels.
According to the International Energy Agency’s annual study issued in December 2023, the demand for global oil rose by 2.3 million barrels per day in 2023 to 101.7 million barrels per day.
However, the IEA said this “masks the impact of a further weakening of the macroeconomic climate.”
Source: Energy Ghana