The oil price war is changing its course after Saudi Arabia’s announcement that it is not planning to increase oil production to reach its full capacity.
In a state visit to China, the Saudi Energy Minister Khalid Al-Falih told media sources that Saud Arabia could be pumping up to 12.5 million barrels per day (bpd), but has no plans to raise output to this level.
“There is no price war”, the minister said in an interview with Al-Arabiya television, explaining that attempts by other countries to raise production and gain market share are “normal”.
Oil Price War Changes Course with Saudi Arabia
According to the minister, the oil market is currently oversupplied at record levels. Therefore, Saudi Arabia sees no need to reach its full output capacity and oversupply the market any further.
As a result, the country plans to remain flexible and meet demand in case it rises, without targeting any specific figures and focusing only on customers’ needs.
Saudi Arabia Energy Minister Khalid al-Falih
Saudi Arabia had raised production in June and July, hitting record output levels, to respond to a seasonal increase in demand and higher export requirements taking place in the Middle Eastern nation.
US Stockpiles Continue to Hit Record Levels
Meanwhile, crude stockpiles in the US have risen by 2.3 million barrels to 525.9 million barrels last week, hitting historically high levels for this time of the year, according to information disclosed by the US Energy Information Administration (EIA).
The continued rise in crude stocks has led to a continued slump in prices, with Brent and WTI losing more than 2.5% in value on Wednesday and with estimates for the trend to continue.
The Organisation of Petroleum Exporting Countries (OPEC) is due to meet in Algeria later this month to discuss the possible revival of a global production freeze agreement.