Saudi Arabia Considers Production Increase... Brent Oil Surpasses $65

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Park Byung-hee] The world's largest oil producer, Saudi Arabia, plans to increase production within a few months, the Wall Street Journal reported on the 17th (local time), citing sources from the Saudi royal family.

Saudi Arabia is expected to announce its production increase plan at the upcoming meeting of the Organization of the Petroleum Exporting Countries (OPEC) and the coalition of major non-OPEC oil producers including Russia, known as 'OPEC Plus (OPEC+)', scheduled for next month.

This marks a shift in policy direction for Saudi Arabia, which had recently focused on production cuts. Last month, Saudi Arabia announced it would cut production by 1 million barrels per day in February and March, citing the need to raise oil prices as the reason for the cuts.

However, the recent significant rise in oil prices has reduced the necessity for production cuts.

On this day, West Texas Intermediate (WTI) crude oil futures on the New York Mercantile Exchange (NYMEX) closed regular trading at $61.14 per barrel, up $1.09 (1.82%) from the previous trading day, and surpassed the $62 mark in after-hours trading. According to Bloomberg, WTI rose to as high as $62.26 in after-hours trading.

Brent crude futures on the ICE Futures Exchange also surpassed $65 per barrel in after-hours trading. This is the first time Brent crude has exceeded $65 since January of last year. Brent crude closed regular trading at $64.34 per barrel, up $0.99 from the previous day, and rose to $65.52 in after-hours trading.

Saudi Arabia stated it will maintain the current production cut stance until March, but there is a possibility of changes depending on oil price trends.

OPEC+ decided in a virtual meeting on the 5th of last month to reduce the production cut scale from 7.2 million barrels per day (compared to October 2018 production levels) to 7.125 million barrels in February and 7.05 million barrels in March.