RIYADH: Saudi Oil Minister, Ali Al Naimi, said that Kingdom produced 10.3 million barrels per day (bpd) of crude in March, a figure that would eclipse its previous recent peak of 10.2 million bpd in August 2013.
Saudi Arabia has revved up crude production to its highest rate on record, feeding unexpectedly strong demand from foreign refiners and increased capacity at home.
Just a few weeks earlier, Naimi had pegged production at around 10 million bdp, some 350,000 bpd above what Saudi Arabia said it pumped in February. The kingdom produces more than 10 per cent of the world’s crude.
Naimi did not say why production had increased last month. He said in the speech in Riyadh that the kingdom’s output would likely remain around 10 million bpd.
The increase in output reaffirms Saudi Arabia’s vow not to cede market share to higher-cost producers, such as US shale drillers or Russian giants. Saudi Arabia and others in Opec have refused to cut production to shore up prices.
It also highlights the surprising strength of end-user fuel demand, which has helped lift global refinery profit margins to their highest levels in years.
Oil prices rallied on separate Naimi comments about working with other big producers to stabilize the market – something most analysts see as unlikely in the near future – but it was the production figure that raised eyebrows.
“While April and May could see a small pullback, overall it is clear that Saudi Arabia has reacted to stronger demand for their crude, despite being in an oversupplied market,” Energy Aspects chief analyst Amrita Sen wrote in a note. Demand was stoked in part by deep discounts on Saudi exports in March as the Kingdom offered Asian customers the deepest discounts on its flagship Arab Light crude in at least 12 years, according to data.
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