The recent visit by U.S. Vice President Joe Biden to the world’s largest oil exporter, Saudi Arabia, came to a close without any declarations that the country will increase oil output to assist reduce fuel prices, which are causing the greatest inflation in the United States in forty years.
According to discussions had during Biden’s visit, top U.S. energy envoy Amos Hochstein stated on Sunday on a television program that big producers with excess capacity are expected to increase output in the coming weeks.
Increasing investments in both fossil fuels and clean energy technology, according to Saudi Crown Prince Mohammed bin Salman, would prevent the astronomical amounts of inflation that would result from unrealistic emission policies.
Prince Faisal bin Farhan Al Saud, the foreign minister of Saudi Arabia, stated that OPEC+ would continue to monitor market developments and take appropriate action.
Saudi Arabia and the United Arab Emirates are thought to be the only countries in OPEC and the rest of the world with sizable quantities of spare production capacity, as OPEC and its allies, known as OPEC+, are undoing historic output curbs agreed upon in 2020.
A number of reasons, including low oil prices during a global surplus in 2014–2016 and a decline in drilling rates because of the COVID epidemic in 2020, have reduced OPEC’s overall oil capacity.
Analysts and industry sources stated that the Gulf producers, particularly Saudi Arabia, were not immune to this process, restricting the scope of any rise that might be offered, at least in the short term.
Here are some responses to queries regarding the potential increase in Saudi Arabia’s oil production.
In a statement to the media earlier this month, Saudi Aramco, the country’s state-owned oil business, claimed that it had increased production to its current level of 12 million barrels per day (bpd) two years prior.
There is still 1.35 million bpd available based on Saudi Arabia’s June output of 10.65 million bpd.
By 2027, Riyadh plans to boost its production capacity to 13 million barrels per day, according to Prince Mohammed, and “thereafter the Kingdom will not have any more capability to enhance output.”
Recently, 12 million bpd was questioned by two industry sources.
According to a senior source, Aramco could pump an additional 1 million bpd on top of the approximately 10.5 million bpd it was now producing, limiting output to 11.5 million bpd.
Another source claimed that Aramco could not pump petroleum above 11 million bpd without using stocks, based on information from confidential interactions with Aramco insiders.
In June, Biden overheard French President Emmanuel Macron informing him that Saudi Arabia had very little extra potential to raise supply.
Macron claimed that the president of the UAE had informed him that Saudi Arabia might expand production by 150,000 bpd or possibly even more, and that they wouldn’t have “great capacities” until six months from now.
Saudi Arabia might temporarily increase supply by reducing stocks kept both within the kingdom and in major urban centers.
Aramco doesn’t reveal the quantity of its inventories, but according to industry estimates, the company might release an additional 300,000 to 500,000 barrels each day for 60 to 90 days.
According to industry insiders, Saudi Arabia has been stepping up drilling rates, which OPEC data indicates only slightly recovered or decreased further in 2021, in an effort to increase production capacity.
