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Aramco to Sustain High Oil Output

Aramco to Sustain High Oil Output
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Aramco to Sustain High Oil Output

Aramco to Sustain High Oil Output

State oil giant Saudi Aramco said on Monday it was likely to sustain higher oil output planned for April through into May, and that it was “very comfortable” with a price of $30 a barrel.

Aramco announced last week it would be raising its output in April to a record 12.3 million barrels per day.

“In a nutshell, Saudi Aramco can sustain the very low price and can sustain it for a long time,” Chief Executive Amin Nasser said on Monday during a full-year earnings call with investors and analysts. “For the production in May ... I doubt it would be any different from next month.”

Nasser said that the boost in output and exports would reflect positively on the company despite low oil prices. Aramco has some of the lowest production costs in the world.

CFO Khalid al-Dabbagh said Aramco was “very comfortable” with oil at $30 a barrel and would still be able to meet its dividend commitments and shareholder expectations at that price.

“We are very comfortable that we can meet our dividend commitment, and we are very comfortable that we can meet our shareholders’ expectations at $30 (a barrel) or even lower,” he said.

Nasser said Aramco would draw 300,000 bpd from its huge inventories to hit that record supply in April, and could sustain its maximum output of 12 million bpd for a year with no need for further spending. Saudi Arabia, the world’s top oil exporter, has hundreds of millions of barrels of crude stored.

He also said Aramco was currently evaluating boosting its maximum oil output capacity by another 1 million bpd to 13 million bpd.

Saudi Arabia said last week it would launch a program to boost production capacity for the first time in more than a decade.

It also said it plans to cut capital spending in the wake of the coronavirus outbreak, while posting a plunge in profit for last year.

Saudi Arabia’s decision last year to float shares in its state oil company - the most profitable company in the world - was one of the central elements in Crown Prince Mohammed bin Salman’s program for economic and political reform.

The record-setting IPO was touted as making the world’s biggest energy exporter more professional and transparent.

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Firm Dollar Keeps Pound, Euro and Yen Under Pressure

US Dollar and Euro banknotes are seen in this illustration taken July 17, 2022. REUTERS/Dado Ruvic/Illustration/ File Photo
US Dollar and Euro banknotes are seen in this illustration taken July 17, 2022. REUTERS/Dado Ruvic/Illustration/ File Photo
TT
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Firm Dollar Keeps Pound, Euro and Yen Under Pressure

US Dollar and Euro banknotes are seen in this illustration taken July 17, 2022. REUTERS/Dado Ruvic/Illustration/ File Photo
US Dollar and Euro banknotes are seen in this illustration taken July 17, 2022. REUTERS/Dado Ruvic/Illustration/ File Photo

The US dollar charged ahead on Thursday, underpinned by rising Treasury yields, putting the yen, sterling and euro under pressure near multi-month lows amid the shifting threat of tariffs.

The focus for markets in 2025 has been on US President-elect Donald Trump's agenda as he steps back into the White House on Jan. 20, with analysts expecting his policies to both bolster growth and add to price pressures, according to Reuters.

CNN on Wednesday reported that Trump is considering declaring a national economic emergency to provide legal justification for a series of universal tariffs on allies and adversaries. On Monday, the Washington Post said Trump was looking at more nuanced tariffs, which he later denied.

Concerns that policies introduced by the Trump administration could reignite inflation has led bond yields higher, with the yield on the benchmark 10-year US Treasury note hitting 4.73% on Wednesday, its highest since April 25. It was at 4.6709% on Thursday.

"Trump's shifting narrative on tariffs has undoubtedly had an effect on USD. It seems this capriciousness is something markets will have to adapt to over the coming four years," said Kieran Williams, head of Asia FX at InTouch Capital Markets.

The bond market selloff has left the dollar standing tall and casting a shadow on the currency market.

Among the most affected was the pound, which was headed for its biggest three-day drop in nearly two years.

Sterling slid to $1.2239 on Thursday, its weakest since November 2023, even as British government bond yields hit multi-year highs.

Ordinarily, higher gilt yields would support the pound, but not in this case.

The sell-off in UK government bond markets resumed on Thursday, with 10-year and 30-year gilt yields jumping again in early trading, as confidence in Britain's fiscal outlook deteriorates.

"Such a simultaneous sell-off in currency and bonds is rather unusual for a G10 country," said Michael Pfister, FX analyst at Commerzbank.

"It seems to be the culmination of a development that began several months ago. The new Labour government's approval ratings are at record lows just a few months after the election, and business and consumer sentiment is severely depressed."

Sterling was last down about 0.69% at $1.2282.

The euro also eased, albeit less than the pound, to $1.0302, lurking close to the two-year low it hit last week as investors remain worried the single currency may fall to the key $1 mark this year due to tariff uncertainties.

The yen hovered near the key 160 per dollar mark that led to Tokyo intervening in the market last July, after it touched a near six-month low of 158.55 on Wednesday.

Though it strengthened a bit on the day and was last at 158.15 per dollar. That all left the dollar index, which measures the US currency against six other units, up 0.15% and at 109.18, just shy of the two-year high it touched last week.

Also in the mix were the Federal Reserve minutes of its December meeting, released on Wednesday, which showed the central bank flagged new inflation concerns and officials saw a rising risk the incoming administration's plans may slow economic growth and raise unemployment.

With US markets closed on Thursday, the spotlight will be on Friday's payrolls report as investors parse through data to gauge when the Fed will next cut rates.