Saudi Arabian Oil Co. Ordered to Maintain Oil Production Capacity

Saudi Arabian Oil Co., also known as Aramco, has announced that the Saudi government has directed it to keep its Maximum Sustainable Capacity (MSC) at 12 million barrels per day. This comes as the company was working towards increasing its production capacity to 13 million barrels a day.

Updated Capital-Spending Guidance to be Provided

Aramco stated that it will provide an update on its capital-spending guidance when it discloses its 2023 results in March. This directive from the Ministry of Energy puts a halt to Aramco's plans to increase its production capacity by 2027, therefore tightening supply.

Recent Factors Impacting Oil Prices

With recent turmoil in the Red Sea, winter storms in the United States, and robust demand, oil prices have been on the rise. However, Aramco's directive to maintain its MSC at 12 million barrels per day may have implications for the market.

Previous Efforts to Increase Production Capacity

It is worth noting that Aramco had previously received instructions from the Kingdom's Ministry of Energy in March 2020 to increase its maximum sustainable capacity to 13 million barrels a day. In 2022, the company's average hydrocarbon production reached 13.6 million barrels a day, including 11.5 million barrels a day of total liquids.