The world’s largest oil producer is doing its part to facilitate the transition away from fossil fuels.That’s because Saudi Arabia has taken the unilateral decision to cap its oil production capacity — not the amount it actually produces —at 12 million barrels per day (bpd) instead of boosting it to 13 million bpd.It comes after the world’s largest national oil company (NOC) Saudi Aramco, was ordered by its parent government to halt expansion of its nameplate capacity pursuant to the ‘Hydrocarbons Law’ enacted by ‘Royal Decree M/37’ dated December 20 2017.In an official edict, no other reason was given..But observers said the proclamation was in deference to the world’s transition from fossil fuels to net-zero under the Paris Accord. Saudi Arabia is simultaneously the world’s largest oil exporter and the largest member of OPEC — although it isn’t the world’s largest oil producer. Although it could be.That title goes to the United States of America, which after years in the oil producing wilderness pumped 13 million bpd last year, making it the undisputed heavyweight champion of the oil producing world.Canada is alternatively fourth or fifth, at about 4.5 million bpd.Saudi’s decision to reign in capacity is noteworthy, because it tends to sit on spare capacity to allow it to swing markets — and control price — in times of short supply. Which means, essentially, it will be powerless to bring prices down if they spike.It comes even as Aramco’s CEO Amin Nasser has often warned the market the industry is underinvesting in new oil supply, which, regardless of many scenarios, will continue to be needed for decades..Prince Abdulaziz bin Salman announced the decision at a conference in Saudi Arabia on Monday.“We are transitioning and transitioning means that our oil company, which is a hydrocarbons company, now is becoming an energy company, with investments that go into all areas like oil, gas and petrochemicals and others.” North American benchmark West Texas Intermediate (WTI) was up about seven cents on Monday to USD$76.91 while UK Brent was actually down a nickel to $82.08. Alberta’s signature bitumen blend was up 82 cents to $60.70.
The world’s largest oil producer is doing its part to facilitate the transition away from fossil fuels.That’s because Saudi Arabia has taken the unilateral decision to cap its oil production capacity — not the amount it actually produces —at 12 million barrels per day (bpd) instead of boosting it to 13 million bpd.It comes after the world’s largest national oil company (NOC) Saudi Aramco, was ordered by its parent government to halt expansion of its nameplate capacity pursuant to the ‘Hydrocarbons Law’ enacted by ‘Royal Decree M/37’ dated December 20 2017.In an official edict, no other reason was given..But observers said the proclamation was in deference to the world’s transition from fossil fuels to net-zero under the Paris Accord. Saudi Arabia is simultaneously the world’s largest oil exporter and the largest member of OPEC — although it isn’t the world’s largest oil producer. Although it could be.That title goes to the United States of America, which after years in the oil producing wilderness pumped 13 million bpd last year, making it the undisputed heavyweight champion of the oil producing world.Canada is alternatively fourth or fifth, at about 4.5 million bpd.Saudi’s decision to reign in capacity is noteworthy, because it tends to sit on spare capacity to allow it to swing markets — and control price — in times of short supply. Which means, essentially, it will be powerless to bring prices down if they spike.It comes even as Aramco’s CEO Amin Nasser has often warned the market the industry is underinvesting in new oil supply, which, regardless of many scenarios, will continue to be needed for decades..Prince Abdulaziz bin Salman announced the decision at a conference in Saudi Arabia on Monday.“We are transitioning and transitioning means that our oil company, which is a hydrocarbons company, now is becoming an energy company, with investments that go into all areas like oil, gas and petrochemicals and others.” North American benchmark West Texas Intermediate (WTI) was up about seven cents on Monday to USD$76.91 while UK Brent was actually down a nickel to $82.08. Alberta’s signature bitumen blend was up 82 cents to $60.70.
