Saudi Aramco will supply 8.5m barrels per day from May following price war with Russia

Saudi Aramco will supply 8.5m barrels per day from May following price war with Russia
The drop comes following a vicious price war between Saudi Arabia's state oil company and Russia.
2 min read
18 April, 2020
Aramco is attempting to keep up with demand [Getty]
Saudi oil giant Aramco said Friday it would market 8.5 million barrels per day (bpd) of crude  oil from May under a producers' agreement to restrict supply and boost plummeting prices following problems caused by the coronavirus pandemic.

The deal came after a price war between Riyadh and Russia saw the kingdom boost supplies to records of over 18 million bpd earlier this month.

In a brief statement on the website of the Saudi bourse, the firm said Friday it would make available 8.5 million bpd, without clarifying whether or how this would be split between exports and domestic supply.

Global oil prices have collapsed amid economic turmoil due to the novel coronavirus pandemic, along with a supply glut and the Saudi-Russian price war.

But the OPEC+ alliance of major producers, led by Riyadh and Moscow, agreed Sunday to slash daily production by 9.7 million bpd over the next two months.

According to the deal, Saudi Arabia and Russia will cut 2.5 million bpd each from their October 2018 production levels of 11 million bpd.

Read More: Oil price truce: The Russia-Saudi standoff is over. But at what cost?

Saudi energy minister Prince Abdulaziz bin Salman was quoted by local media on Tuesday as saying that G20 producers outside OPEC+ have pledged to cut 3.7 million bpd.

Taken alongside the OPEC+ pledges and strategic reserves purchases, this could reduce global supply by 19.5 million barrels per day, he said.

Market uncertainty 

Oil prices continued to drop on Monday, coming days after a fierce oil price war erupted between Russia and Saudi Arabia, which only ended last week after producers agreed to cut production in a bid to stabilise the market.

Despite the main producers - including Russia and Saudi Arabia - agreeing to record cuts, oil prices remained static on Monday with the effects of the coronavirus epidemic hitting demand.

The OPEC members - of which Riyadh is the leader - and Russia had agreed to a cut of nearly 10 percent of total global supplies, after the price of oil fell way below the $30 a barrel mark.

Yet demand is way below normal levels due to the coronavirus crisis seeing lockdowns in place for more than half the world's population.

The market is also awash with oil with storage facilities at full capacity.

With additional reporting from agencies.

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