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OPEC Plus Looks into 1.5 bpd Boost in Oil Production

People walk past the OPEC logo in front of its headquarters in Vienna. (Reuters)
People walk past the OPEC logo in front of its headquarters in Vienna. (Reuters)
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OPEC Plus Looks into 1.5 bpd Boost in Oil Production

People walk past the OPEC logo in front of its headquarters in Vienna. (Reuters)
People walk past the OPEC logo in front of its headquarters in Vienna. (Reuters)

The OPEC and non-OPEC countries in a global oil output deal will consider increasing output by 1.5 million per day in the third quarter only, Russian Energy Minister Alexander Novak said on Saturday, the TASS news agency reported.

Russia and Saudi Arabia have agreed to extend cooperation indefinitely and will discuss the agreement in Vienna next week, Novak said.

He stated that the gradual increase is possible from July 1, but the countries who joined the global oil production cut deal are yet to discuss all the terms. The OPEC and non-OPEC countries are also meeting next week in Vienna.

Oil prices fell more than $2 after two of the world's biggest oil producers indicated they could increase oil output at the OPEC meeting next week, while US exports are threatened by Chinese customs duties on crude and refined products.

Investors are tense ahead of the Vienna meeting. Saudi Arabia and Russia have already increased their production of crude slightly.

Brent crude ended the week at $2.50, or 3.29 percent, at $73.44 per barrel.

US WTI crude fell 1.83 dollars, or 2.74 percent, closing at $65.06 a barrel.

After closing the official trading session for the oil market, China announced the imposition of retaliatory tariffs on US products worth 50 billion dollars, in response to a series of customs announced by US President Donald Trump.

Over the past six months, the US has exported an average of 363,000 barrels per day of crude oil to China which is the largest buyer of US crude along with Canada.

On the other hand, the number of active oil rigs in the US rose for a fourth week in a row, despite a 9 percent fall in crude prices over the past month. Despite this decline, producers still expect their oil prices in 2018 to be higher than in 2017.

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Saudi Arabia Stockpiles Surplus Oil Production to Face Global Crises

Employees at Aramco (Asharq Al-Awsat)
Employees at Aramco (Asharq Al-Awsat)
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Saudi Arabia Stockpiles Surplus Oil Production to Face Global Crises

Employees at Aramco (Asharq Al-Awsat)
Employees at Aramco (Asharq Al-Awsat)

Saudi Arabia has long followed a clear and transparent approach to preserving stability in global energy markets. Historically, it has consistently adhered to all decisions issued by the OPEC+ alliance and played a leading role alongside other producers to ensure compliance and promote the collective good.

Recently, the Kingdom briefly increased production volumes. However, the additional output was neither marketed domestically nor exported abroad. Instead, it was directed as a precautionary measure to strengthen strategic reserves, improve supply flows between the country’s eastern and western regions, and rebalance stocks held in overseas storage facilities.

Asharq Al-Awsat reached out to energy specialists to understand the significance of this move for energy security. Experts explained that building strategic reserves allows Saudi Arabia to respond swiftly to customer needs in the event of political crises, regional wars, adverse weather, or other unforeseen disruptions.

Fouad Al-Zayer, former head of data services at OPEC and an energy expert, said the Kingdom maintains millions of barrels in storage both inside and outside its borders. These reserves serve as a buffer during emergencies, enabling the country to compensate for supply shortfalls within a short timeframe. He emphasized that this stored crude is strategically critical in the face of geopolitical tensions and conflicts.

According to Al-Zayer, Saudi Arabia relies on an extraordinary reserve capacity unmatched by any other producer. The country currently produces more than 9 million barrels per day, with the capability to pump even higher volumes if needed. He noted that Saudi reserves alone account for 3 million barrels per day out of roughly 5 million barrels in global spare capacity, underscoring Riyadh’s central role in stabilizing markets and upholding its commitments under OPEC+ agreements.

He added that Saudi Arabia also hosts the International Energy Forum, which works to improve data quality and transparency in the sector. In June, the Kingdom’s output reached about 9 million barrels per day, with the modest increase attributed to logistical considerations. Al-Zayer stressed that it is common for producers to temporarily boost production to support maintenance operations or replenish storage, without impacting the broader market, since these barrels are not immediately traded.

He reiterated that Saudi Arabia has always honored OPEC+ production targets and has played a pivotal role in encouraging other members to meet their quotas.

Meanwhile, Dr. Mohammed Al-Sabban, former senior adviser to the Saudi Minister of Petroleum, explained that the Kingdom has consistently proven itself a reliable and secure supplier to global energy markets. He noted that Saudi Arabia’s recent statement clarified the reasons behind the June production uptick, emphasizing that the additional oil was neither destined for local consumption nor for export but was solely intended to refill domestic and foreign storage. He said such measures do not represent any breach of commitments, unlike the practices of some other countries.

Al-Sabban pointed out that Saudi Arabia has often gone beyond required cuts to help stabilize markets. Even the recent production increases, he said, fall within the scope of voluntary adjustments agreed upon by OPEC+ members. He noted that in July, Saudi Arabia raised production in line with credible studies indicating the market could absorb these volumes without disruption.