While Saudi officials have not publicly agreed to this, the kingdom, backed by Russia pledged in Vienna last month to increase output by 1m b/d but also paved the way to flout agreed production limits, meaning the raises could be higher. Saudi Arabia is the holder of the world’s largest additional capacity, with an ability to pump an additional 2m b/d on top of the 10m b/d in pumped in May.
Spare global production capacity is the additional output oil-rich countries can bring speedily and sustain, and it is monitored closely by market watchers to assess how vulnerable the crude market is to a price spike should a sudden supply disruption take place. Amin Nasser, the chief executive of Saudi Arabia’s state energy giant Saudi Aramco, has told the FT the kingdom could inrease its output and sustain it at 12m b/d, but this would not be immediate and could take about six months.
Energy analysts say it could take even longer. In the meantime, they have been briefed by the kingdom to expect output as high as a record 11m b/d. Historically, the kingdom has been reluctant to intensify output to the maximum for fear there would be too little a supply buffer should global producers be called on to counter another unplanned supply outage.
Any rapid increase in production by Saudi Arabia could be seen as bullish for the market, particularly as supply from big producers is already taking a hit — from Venezuela to Libya — even before a drop in output and exports from Iran after the reimposition of sanctions has begun.