Saudi Arabia is about to fill the world with its oil

US, WASHINGTON (ORDO NEWS) — Saudi oil and gas company Saudi Aramco has warned its partners to prepare for a sharp increase in oil production, as it intends to bring production to maximum capacity.

Saudi Aramco asked firms to provide enough personnel and equipment to increase production from Wednesday to 12 million barrels per day for the “foreseeable future.”

The world market is flooded with oil due to the fierce struggle between Russia and Saudi Arabia for market share after two weeks ago they could not agree on a further reduction in production to maintain oil prices.

On Tuesday, amid statements by the US and Russia about their intention to negotiate the stabilization of the energy market after falling oil prices as a result of a sharp increase in production and falling demand, prices rebounded. Saudi Arabia declared its unwillingness to participate in any negotiations.

Donald Trump and Vladimir Putin are going to decide what can be done to set a lower threshold for the price of crude oil after it has fallen by half in less than a month.

After announcements of planned negotiations, the price of Brent crude rose by about 2%, but then fell to below $ 23 per barrel. In early March, she was more than $ 50. The price of American oil was $ 20.28 per barrel.

The oil market collapsed as a result of falling global demand, as passenger traffic and trade were suspended in order to combat the spread of coronavirus against the background of a significant market oversaturation.

According to the Kremlin, on Monday evening during a telephone conversation, Donald Trump and Vladimir Putin agreed that representatives of the energy leadership of the two countries should discuss ways to stabilize the oil markets.

Some analysts predict that in some regions oil prices may become negative when there is a shortage of oil storage capacities, and companies have to pay buyers to get rid of surpluses.

Last week, US Republican senators accused Russia and Saudi Arabia of having brought down oil prices and launched an “economic war” against America.
In a letter to Secretary of State Mike Pompeo, they wrote: “We have carefully chosen this term and understand the seriousness of its meaning.”

Falling oil prices have been a blow to US shale oil producers, and many of them face bankruptcy.

At the same time, due to falling oil prices, Shell in the first quarter of 2020 was forced to write off assets for $ 800 million.

The energy giant warned that difficulties had been encountered in its operation because of the fall in prices, and because of the rapid spread of the coronavirus COVID-19, there was “significant uncertainty” regarding oil and gas prices and demand for the remainder of the year.

The company’s updated quarterly report says that due to coronavirus, it will lower its forecast for the remainder of the year.

In the first quarter, the company expected a decrease in oil and liquefied natural gas.

Shell shares fell almost 8% to 13.59 pounds, although at the beginning of the year their price was more than 25 pounds.

According to the Bloomberg publication, Saudi Aramco is also considering selling a stake in its pipeline division in order to gain about $ 10 billion.

Apparently, the world’s largest oil producer needs to raise funds to pay dividends in the amount of $ 75 billion this year and to pay the first installment in a deal to buy a stake in Saudi Basic Industries Corp. for 70 billion dollars.

At the request of the Bloomberg publication, Saudi Aramco did not respond to this information.

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The article is written and prepared by our foreign editors from different countries around the world – material edited and published by Ordo News staff in our US newsroom press.