Saudi Aramco said it had been asked by the government to stop raising its oil production capacity to 13 million barrels a day and maintain it at 12 million instead, raising questions about the kingdom’s views on future oil demand.
The surprise move comes just months after the world’s biggest oil producer had said it was spending billions of dollars to raise capacity to the higher level by 2027 as demand in China and India continues to grow. Saudi Arabia is currently producing about 9 million barrels a day, curbing output as part of OPEC+ efforts to revive the global oil market and prevent a surplus.
Aramco will update its capital spending guidance when it announces annual results in March, it said in a statement.
The change of plan will have traders questioning Saudi Arabia’s view on the future of oil consumption. While crude remains the backbone of the economy, the country is expanding other businesses such as natural gas, chemicals and renewables. The funds freed up from the oil capacity expansion is likely to be used in these sectors.
Aramco may also be planning for Saudi Arabia’s increased use of natural gas and renewables, which will free up more oil for exports.
