Saudi Prince says he could add a million barrels immediately

17/04/2016 07:26 AST

Saudi Arabia could raise crude production by more than a million barrels a day immediately, said the kingdom’s Deputy Crown Prince on Saturday, as he reiterated the nation would only agree to freeze production if all major producers including Iran do the same.

The world’s largest oil exporter could increase output to 11.5 million barrels a day immediately and go to 12.5 million in six to nine months “if we wanted to,” Prince Mohammed bin Salman, who is also Chairman of the Supreme Council of Saudi Arabian Oil Co., said in an interview Thursday. The country pumped 10.2 million barrels a day last month, according to data compiled by Bloomberg.

If the kingdom chose to increase investment in its oil industry, total production capacity could be increased to 20 million barrels a day, the prince said at King Salman’s private farm in Diriyah, the original home of the Al Saud royal family.

“I don’t suggest that we should produce more, but we can produce more,” said the prince, who is the king’s son, second in line to the throne and a leading force in the country’s economic policy. “We can produce 20 million barrels of oil per day if we invested in production capacity, but we can’t produce beyond 20 million.”

The prince’s comments come as at least 18 nations prepare to gather in Doha on Sunday to discuss freezing output at January levels in order to stabilise an oversupplied market. He reiterated that Saudi Arabia’s commitment to a production cap would depend on the participation of other nations including Iran. Iran’s Oil Minister has dismissed the prospect of joining the deal as “ridiculous” as the country boosts exports after the lifting of sanctions.

Saudi Arabia set a crude production record of 10.564 million barrels a day in June, exceeding a previous high in 1980, according to data the kingdom submitted to the Organisation of Petroleum Exporting Countries. The country ramped up output after it led the group to change strategy in November 2014, fighting for market share instead of supporting prices by cutting production.

Saudi production has been steady at about 10.2 million since January — the proposed level of the freeze. Russia pumped 10.9 million barrels a day of crude and a light oil called condensate last month, also little changed from January, according to Energy Ministry data.

Saudi Arabian Oil Co. has said it will press ahead with new developments and won’t cut investments because of the plunge in crude prices. The company is planning to complete an expansion of the Khurais oilfield’s output to 1.5 million barrels a day in 2018.

Saudi Arabia is producing below its potential capacity because it only responds to demand, the Prince said. “If we produced more oil than there is demand, we would destroy many markets. So we consider supply and demand, and we look at any demand we receive and we deal with it.”

Gulfnews