Saudi Aramco Ditches Plan To Bolster Oil Production

(RTTNews) - State-run Saudi Aramco on Tuesday made a surprising announcement, revealing its decision to cancel the previously planned expansion of its oil output.

This represents a notable shift in strategy for one of the world's largest petroleum producers, who had earlier decided to bolster production capacity by about 8% to 13 million barrels a day by 2027, a plan announced several years ago.

Aramco said it had been directed by the government in Riyadh to maintain its "maximum sustainable capacity" of crude oil production at 12 million barrels a day.

The company has not provided any clear explanation behind its decision to halt the expansion of its oil output. This has triggered widespread speculation that Riyadh may be adopting a more pessimistic outlook on oil consumption, particularly as the global shift toward low-carbon energy gains momentum.

Another speculation is that the Saudi government may want to allocate funds for Crown Prince Mohammed bin Salman's ambitious development projects, as well as investments in alternative energy sources such as natural gas and hydrogen.

Aramco has indicated that it received directives to scale back its expansion efforts from the Ministry of Energy, overseen by Prince Abdulaziz bin Salman, who is the elder half-brother of the crown prince.

The decision may also be influenced by the unexpected strength in global oil supplies. This surge in supply is attributed to robust growth in output from shale drilling in the United States, which has become the leading oil producer, as well as from other sources. The current oil market dynamics, with a surplus in global oil supplies, might have prompted the Saudis to reevaluate their expansion plans.