"Saudi Arabia's Strategic Oil Capacity U-Turn: A Calculated Move"
Originally Published 1 year ago — by Reuters
Saudi Arabia's decision to halt plans to boost its maximum sustainable oil production capacity to 13 million barrels per day was driven by uncertainty over the market's need for additional spare capacity, with the possibility of a future increase. The kingdom's spare capacity had not been fully monetized, and the decision was made at the top level. This move reflects a recognition within OPEC+ of challenges in the market, as the alliance has cut oil output despite rising demand and non-OPEC supply. Saudi Arabia's state oil giant Aramco is expected to revise its capital expenditure downwards following the capacity decision, as the kingdom faces a budget deficit amid lower crude production and global prices.
