The world’s top oil exporter, Saudi Arabia, is continuing to tighten its stance in its ongoing oil price war with Russia and is strongly indicating it won’t back down.
In the face of the ongoing COVID-19 coronavirus pandemic that is taking a massive bite out of oil prices in recent weeks, oil giant Saudi Aramco will reduce its refinery rates in April and May to free up more crude oil for exports. This comes from an official with the company who spoke to Reuters, stating that the company was “very comfortable” with crude at $30 a barrel and is prepared to live with low prices for a while.
Though exports were set to top 10 million barrels per day (bpd) in May 2020, Aramco has now been directed to keep pumping crude at a record rate of 12.3 million bpd in the coming months. It also plans to raise its oil production capacity to 13 million bpd.
Further Reading – “The Oil War Begins”.
A clear difference can be seen at the gas pump. This time last year, Metro Vancouver fuel prices had hit a record high, more than $1.70 a litre, but have since hit a 17-year low, down to 99 cents per litreover the weekend, according to data from gasbuddy.com.
Combined with the ongoing price war between Russia and Saudi Arabia driving down prices, demand for gasoline has declined significantly as people across North America have begun “socially isolating” themselves due to the coronavirus pandemic and many flights have been grounded.
The coronavirus scare is also having its own effect on the energy industry, even the biggest private investment infrastructure project in Canadian history.
LNG Canada was the latest to go from reducing its on-site staff to laying off around 750 workers to help prevent the spread of the virus before it reaches the workers’ camps in northwestern BC. The company said that it is sending half of its workforce home from the $40-billion export facility project.
Will Russia call a bluff on Saudi Arabia in this international oil war game? Will prices go even lower, putting added strain on the energy sector? How will you adjust your portfolio? Let us know in the comments below.
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