The world’s largest oil company Saudi Aramco on Wednesday announced an increase in production of crude oil. In this price war with Russia — that has refused to curtail its production on the request of OPEC — Aramco has announced it is increasing its production capacity by 1 million barrels a day.
Saudi Aramco said that the country’s Ministry of Energy had directed it to increase the production of crude oil from 12 million barrels to 13 million barrels a day. The company posted this information on the Saudi Stock Exchange.
American West Texas Intermediate (WTI) crude fell 1.7% to $ 33 a barrel while Brent crude dropped 1.7% to $ 36 a barrel following the announcement.
Saudi Arabia, the world’s largest oil exporter, has cut crude oil prices to ‘teach Russia a lesson’. The Islamic monarchy cut the price of all raw grades by $ 6 to $ 8 per barrel by cutting its official sales scheme for April.
On Monday, the biggest drop in crude oil prices was recorded in 30 days due to the cut in oil prices by Saudi Arabia.
Prices had risen significantly on Tuesday and early Wednesday, however, with investor focus on US President Donald Trump’s promises to introduce stimulus measures to counter the economic impact of the coronavirus pandemic. The prices plummeted again after Saudi Aramco’s announcement.
Trump has promised that he will give relief to the most affected industries airlines and cruise companies by the virus, but the lack of any concrete steps has raised investor concern.
Due to the coronavirus pandemic, the demand for oil is soft. There is a possibility of increase in supply, adversely affecting the market.
Saudi Arabia’s stance caused a furore in the markets around the world on Monday, but on Tuesday, the condition of oil and stock markets showed improvement.