Saudi Aramco Cuts Oil Production Target to 12 Million Barrels Per Day
Saudi Aramco, the world’s largest oil producer, has announced a reduction in its planned maximum sustainable oil production capacity from 13 million to 12 million barrels per day (bpd). This directive, originating from the Saudi government, reflects neither a shift in oil demand forecasts nor technical issues. The decision marks a reversal from March 2020 when Aramco was instructed to increase capacity to 13 million bpd amid a market share dispute with Russia.
The company, possessing a spare capacity of 3 million bpd, is also undertaking a significant liquids displacement program, potentially freeing up another 1 million bpd for oil and refined products. Despite this adjustment, Brent crude futures remained stable at $82.43 per barrel.
Aramco had previously planned a record capital expenditure (capex) of $45 billion to 55 billion in 2023, but RBC Capital Markets analysts now expect a reduction in spending, potentially affecting projects like the 700,000 bpd Safaniya project.
Aramco’s focus may shift toward growth areas such as gas and new energies, exemplified by its recent investment in liquefied natural gas. The company’s CEO, Amin Nasser, maintains an optimistic outlook for oil demand growth, forecasting a demand of 104 million bpd in 2024. This strategic adjustment could also free up funds for the Saudi government’s Vision 2023 objectives and economic diversification efforts.
