Aramco to increase oil output to 12.3m barrels per day starting April

Gulf stock markets rebounded strongly in opening trade Tuesday, led by Saudi Tadawul as oil prices bounced after heavy losses.(File/AFP)
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Updated 11 March 2020

Aramco to increase oil output to 12.3m barrels per day starting April

  • Increase in production level would be 300,000 barrels per day
  • Trading of Aramco shares earlier suspended upon the oil company’s request

DUBAI: Saudi Aramco, the world’s largest oil company, is to increase crude production to record levels in a bid to win market share in the global tussle over energy prices.

In a statement to the Tadawul stock exchange in Riyadh — where the shares are listed — the company said: “Saudi Aramco will provide its customers with 12.3 million barrels per day of crude oil in April, an increase of 300 thousand barrels per day over the company’s maximum sustained capacity of 12 million barrels. The company has agreed with its customers to provide them with such volumes starting 1 April.”

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

The announcement — coming in the middle of unprecedented volatility in global energy markets — was preceded by a brief suspension of its shares on the Tadawul, at its own request, as is required when a listed company is about to announce a “material event.”

The move to increase output dramatically follows notification to customers that Aramco would offer big discounts around the world, and further ratchets up the pressure on global energy markets.

It was followed by an immediate response by Russia, the world’s second biggest producer, with its own output increase.

Aramco shares, which had opened significantly higher despite the global market falls of “Black Monday” the previous day, continued their rise after the announcement, closing at SR31.15 ($8.30), a jump of 9.98 percent on the day.

The Tadawul All Shares Index (TASI) — which had also suffered in the global shares rout on Monday — reflected the improvement in its biggest constituent, with a rise of 7 percent on the day.

Global energy markets recovered some of the ground they lost on Monday, when crude prices had initially suffered their biggest falls in three decades. Brent crude, the benchmark for Middle East trading, was 8.5 percent higher at $37.27 as US markets opened.

The recent market volatility came when ministers from the Organization of the Petroleum Exporting Countries (OPEC) — in which the Kingdom is the biggest producer — failed to reach an agreement with other producers at the Vienna OPEC+ talks last weekend 

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Market sentiment was improved by what analysts took to be a conciliatory statement from the Russian leadership — which heads the non-OPEC producers — about the disagreement.

Dmitry Peskov, spokesman for the Russian President Vladimir Putin, told journalists in Moscow that Russia did not rule out the possibility of a compromise on oil output after the Vienna breakdown, which he said had been foreseen by the Russian energy minister, Alexander Novak.

“Now we see relative volatility, which, most likely, will continue for some time. A variety of options were calculated and considered in advance (of the Vienna meeting),” Peskov said.

But Moscow also announced plans to ramp up its own production, with Novak later outlining plans to lift output by between 300,000 and 500,000 barrels per day to possibly as much as 11.8 million barrels.

Energy industry experts said that Aramco’s move to dramatically increase production would probably involve removing oil from storage for sale on global markets. If it produces 12.3 million barrels per day that would be around 20 percent higher than its previous production level, and 300,000 more than its “maximum sustained capacity.”

With both Riyadh and Moscowpumping oil at record levels, the pressure is now on the US shale industry, which has higher production costs and which is heavily leveraged in financial terms.

Other big OPEC producers like Iraq and Nigeria also said they would raise output. Energy markets face an unprecedented scenario in which big supply increases by the major producers are taking place as global demand falls by record amounts because of the economic effects of the coronavirus outbreak. 


Dubai launches economic program for post COVID-19 recovery 

Updated 05 August 2020

Dubai launches economic program for post COVID-19 recovery 

  • “The Great Economic Reset Programme” is part of a “COVID Exit initiative” to help the recovery and reshaping of the economy
  • The economic program will feature analyses of current and future policies

DUBAI: Dubai launched an economic program as part of its efforts to reshape the emirate’s economy for a “sustainable” and “resilient” future post the coronavirus pandemic, the government said. 
The Dubai government partnered with the Mohammed bin Rashid School of Government (MBRSG) to launch “The Great Economic Reset Programme” as part of a “COVID Exit initiative” to help the recovery and reshaping of the economy, state news agency WAM reported on Tuesday. 
The economic program will feature analyses of current and future policies, research and extensive stakeholder consultation to set the direction and tone of future economic policies, regulations and initiatives.
The government plans to use local and international experts for economies and societies to create growth strategies for the Dubai economy.
The MBRSG held a “Virtual Policy Council,” with global experts and thought leaders to discuss the impacts of COVID-19 on the economy and potential policy responses and initiatives. 
Chief economists, senior practitioners and researchers from leading global institutions including the World Bank, joined experts from Dubai Economy and the MBRSG at the first roundtable.
“I believe the triple helix collaboration between public, private and academia stakeholders have always produced the best solutions in the past. In the highly uncertain environment now, extensive collaboration and cooperation between all stakeholders are vital to our future prosperity. The Virtual Policy Council will propose the best approaches Dubai and the UAE can adopt to address the risks and opportunities in the next normal economy,” said Mohammed Shael Al-Saadi, CEO of the Corporate Strategic Affairs sector in Dubai Economy.
“This Virtual Policy Council is a key component of the whole process where global experts and thinkers share their views on the future economy. In this new era, the role of governments in enabling the new economic actors is becoming increasingly central, and Dubai is well-positioned to lead the way with innovative models of growth post COVID19,” said Professor Raed Awamleh, Dean of MBRSG.
The roundtable also discussed the impact of the pandemic on international trade, foreign investment and tourism, as well as the rise of digital globalization.