Saudi Arabia says it can flood the oil market with over 1 million extra barrels right away
Saudi Arabia says it can flood the market with a lot more oil.
Deputy Crown Price Mohammed bin Salman said The Kingdom could increase output to 11.5 million barrels a day right away, and up to 12.5 million within six to nine months "if we wanted to."
"I don’t suggest that we should produce more, but we can produce more,” he said.
“We can produce 20 million barrels of oil per day if we invested in production capacity, but we can’t produce beyond 20 million," he added.
Data compiled by Bloomberg indicates the Saudis produced about 10.2 million barrels a day in March.
(RBC Capital Markets)
Mohammed bin Salman's
comments come ahead of Sunday's meeting among oil producers in Doha, Qatar to discuss a potential production freeze.
It is not clear to wha extent his comments reflect the thinking of the Saudi leadership and king, but they could raise tensions ahead of the meeting after several weeks of mostly conciliatory statements from market players.
Notably, most analysts aren't getting their hopes up ahead of the talks — especially since the Saudis keep reiterating that they won't cut production unless others (read: Iran) do, too. However, Iran isn't even going to the meeting.
"As it stands now, we believe that the most likely outcome is that producers fail to close the deal and announce a freeze on Sunday, but that they instead pledge to continue to conversation and even possibly put an additional OPEC/non-OPEC meeting on the calendar for later in the year," Helima Croft, the head of commodities research at RBC Capital Markets, wrote in a note to clients on Thursday.
"Saudi Arabia and Iran do not appear ready to give sufficient ground to get a comprehensive freeze agreement done by Sunday, given current information," she explained.
(Credit Suisse Research)
Producers have struggled for nearly two years with low oil prices and an over-supplied market but have been loath to cut output as that would cede market share to rivals.
Sanctions imposed by the United States and other world powers were lifted in January in return for Tehran agreeing to long-term curbs on its nuclear program.
Prince Mohammed said Saudi Arabia would cap its market share at about 10.3 million to 10.4 million barrels a day (bpd), if producers agree to the freeze.
But in defiant comments ahead of the talks, Prince Mohammed added: "If all major producers don’t freeze production, we will not freeze production ... If we don’t freeze, then we will sell at any opportunity we get."
Tehran's stance has not torpedoed the convening of the meeting, something that suggests many fellow producers may be prepared to tolerate a rise in Iranian output temporarily, provided there is no new price rout.
Iran's production has already surpassed 3.5 million bpd and exports are set to reach 2 million bpd next month, Iran's deputy oil minister was quoted as saying by state news agency IRNA on Saturday.
Countries are discussing a number of reference points at which to freeze output - January levels, February levels or an average - and have floated the idea of setting up a committee to monitor compliance.
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