Saudi Aramco will raise crude supply starting April

Saudi Aramco will raise crude supply starting April

Sorokin said that meant companies began to invest in high-cost oil again, reducing the impact of more output cuts by producer countries.

Markets had been showing signs of much-needed stability in early trade following two days of wild gyrations.

"The race for market share is on and you have to bet on the Saudis because they are the ones with most of the spare capacity", said Gary Ross, founder of BlackGold Investors.

"The company is exerting its maximum efforts to implement this directive as soon as possible", he said. In addition, the company said it will accelerate plans for its 5 million barrel per day production capacity target. Its capacity was expected to be 4 million bpd by the end of 2020.

That came after Russian Federation rejected calls from oil-exporting group OPEC, which includes Saudi Arabia, for deeper output cuts to combat a coronavirus-fuelled slump in demand. The role has won Riyadh global influence but sometimes at the cost of losing customers.

Till now, the kingdom has rarely produced above 10.5 million bpd despite having spare capacity.

That would be a post-Soviet high but still below the more than 12 million bpd the Saudi energy ministry has said it will produce in April.

USA oil companies, barred by law from joining any pacts to limit output, are among the first to feel the heat.

"The challenge for oil market at large is that OPEC has gone back to its plan of managing its own market share rather than stabilizing prices", said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management in Seattle.

Russia, however, requires oil prices to be around $42-$45 per barrel.

Rosneft CEO Igor Sechin, a close ally of President Vladimir Putin's, had long argued the cutback agreement with OPEC was hurting Russia's interests and benefiting shale producers in the United States.

The decision came a day after Saudi Arabia, the world's top exporter, chose to hike production by at least 2.5 million bpd to a record 12.3 million from April, and prompted sharp new falls in world prices.

For the country's energy sector companies, lower oil prices would be a mixed bag. They were trading at 29.70 riyals ($7.91) on Wednesday, compared to its December listing price of 32 riyals.

The group's overall output fell by 546,000 barrels a day to 27.77 million a day last month, largely because of losses in Libya, where a renegade military commander has blockaded ports while sparring with the national government.

Oil prices tumbled Wednesday after Saudi Arabia and Gulf partner UAE stepped up the price war with plans to flood the global markets while a rally in equities evaporated as investors nervously await a US coronavirus relief plan.

Several years ago, the kingdom shelved plans to boost its crude production capacity beyond 12 million bpd after demand for OPEC oil declined in the face of stiff competition from North American shale oil and other sources. The kingdom trimmed output by 56,000 barrels a day in February to 9.68 million a day, cutting production even beyond the additional curbs it promised at the end of past year.

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