US President Joe Biden’s visit in recent days to top oil exporter Saudi Arabia ended with no assurances that the kingdom would increase oil production to help lower fuel prices that have fueled the highest US inflation in four decades. .
But White House spokeswoman Karen Jean-Pierre said the US government expects OPEC+ members to increase oil production after the US president’s visit to the Middle East.
“We will measure success in the next two weeks,” the Foreign Ministry spokesman said at a press conference on Monday, adding: “We expect an increase in production, but it will take the next two weeks and it depends on OPEC.” “
Top U.S. Energy Representative Amos Hochstein said on a television program Sunday that major producers with excess capacity are likely to increase output in the coming weeks based on talks during Biden’s trip.
According to Reuters, Saudi Arabia’s Crown Prince Mohammed bin Salman said that “unrealistic policies to reduce greenhouse gases will lead to unprecedented inflation” and called for increased investment in fossil fuels and clean energy technologies.
A Reuters analysis notes that with the Organization of the Petroleum Exporting Countries and its allies, Saudi Arabia and the United Arab Emirates, holding only significant amounts of the world’s unused production capacity, with the record production cuts agreed to in 2020 being lifted.
Saudi Arabia’s Foreign Minister Prince Faisal bin Farhan said OPEC+ will continue to assess market conditions and do what is necessary.
OPEC oil capacity has generally been reduced due to a number of factors, including periods of low oil prices amid a global glut from 2014 to 2016 and reduced drilling rates due to the Covid pandemic in 2020, according to Reuters.
According to analysts and industry sources who spoke to Reuters, Gulf producers, including Saudi Arabia, were not immune to the process, limiting the amount of increases that could be offered, at least in the short term.
Saudi Arabia’s state-owned oil company Aramco told Reuters in a statement earlier this month that it would maintain its maximum crude oil capacity of 12 million barrels per day, a level it reached two years ago.
Based on Saudi Arabia’s June output of 10.65 million bpd, another 1.35 million bpd remains to be produced.
Saudi Arabia’s crown prince said on Saturday that Riyadh had announced that it would increase its production capacity to 13 million barrels per day by 2027 and “after that, the kingdom will have no further ability to increase production.”
Two industry sources recently questioned whether reaching 12 million barrels per day is possible.
A senior source told Reuters that Aramco may produce another 1 million bpd on top of the roughly 10.5 million bpd it was producing at the time, meaning output could not exceed 11.5 million bpd.
Another source, citing information from private conversations with insiders, said Aramco could not produce more than 11 million barrels per day without relying on oil reserves.
French President Emmanuel Macron was heard to have told Biden in June that Saudi Arabia had very little spare capacity to increase production, Reuters previously reported.
Macron said the UAE president had told him that Saudi Arabia could increase production by 150,000 barrels per day or maybe a little more and not have “huge capacity” for six months.
Saudi Arabia can temporarily add to supply by removing existing reserves in the country and consumption centers alike.
Aramco does not disclose stockpile levels, but industry estimates suggest the company may release an additional 300,000 bpd to 500,000 bpd over a 60- to 90-day period.
Sources in the oil sector told Reuters that Saudi Arabia is ramping up the drilling rate, which was slightly improved or cut further in 2021, according to OPEC figures, in a move that may lead to an increase in production capacity.
Source: Lebanon Debate
