Saudi Arabia has ordered its national oil company Saudi Aramco to increase its crude oil production capacity by 1 million barrels per day (bpd), according to a statement on Wednesday.
Saudi Aramco 'received a directive from the Ministry of Energy to increase its maximum sustainable capacity from 12 million bpd to 13 million bpd,' said the statement released on Saudi stock exchange Tadawul.
The world's biggest company with market capitalization also said Tuesday that it will provide its customers with 12.3 million bpd of crude oil starting from April 1, which is an increase of 300,000 bpd over the company’s maximum sustained capacity.
Saudi Arabia, the world's largest crude oil exporter currently produces approximately 9.7 million bpd of crude oil, according to OPEC's Monthly Oil Market report for February.
The latest increase in Saudi output could add an additional 3.3 million bpd of crude oil to the global oil market, and intensify the downward pressure on oil prices.
Russia also said Tuesday that it may boost its crude oil production by 250,000-300,000 bpd in the short term, and up to 500,000 bpd in the longer term.
The tit-for-tat strategy from two OPEC+ heavyweights came after they failed Friday to agree on a deeper oil production cut deal, which later turned into a price war for higher market share against each other and U.S. shale oil producers.
Oil prices posted more than a 30% decline on Monday, plummeting to their lowest level since February 2016, and marked their largest single daily percentage loss since January 1991 during the Gulf War.
While Saudi Arabia, whose economy largely depends on crude exports, needs oil prices in the region of around $80-$85 per barrel to balance its budget, Russia requires oil prices to be around $42-$45 per barrel to avoid a budget deficit.
By Ovunc Kutlu