Saudi Arabia says will raise oil exports further in May, in face of coronavirus hit to demand

London — Saudi Arabia's energy ministry on Monday said it will boost its oil exports in May to 10.6 million b/d, further flooding an oil market in which prices have cratered due to the coronavirus pandemic's hit to demand.

In a statement, the ministry said an increase in the amount of natural gas used to generate electricity, along with a decrease in domestic demand for refined products due to the coronavirus outbreak would free up 600,000 b/d additional barrels of crude oil for export in May.

That would bring "the total of Saudi petroleum exports to 10.6 million b/d."

The ministry had said two weeks ago it would "increase its crude exports during the coming few months to exceed 10 million b/d."

The shift in wording in Monday's statement to "petroleum exports" suggests that now some of the volumes could include refined products, condensates or NGLs.

Saudi ministry officials have not responded to questions on how much of the exports would be solely crude.

The kingdom exported 7.29 million b/d of crude oil and 748,000 b/d of refined products in January, according to the latest figures reported by the Joint Organizations Data Initiative. There were no NGL exports from Saudi Arabia, the JODI data shows.

Saudi Arabia has said its state oil giant Aramco will raise crude production to its maximum 12 million b/d capacity once its OPEC quota of 10.14 million b/d expires at the end of March, as well as draw 300,000 b/d from its vast storage inventories, to supply the market with 12.3 million b/d of crude, including its domestic consumption.

Saudi refineries have been running about 2.2 million b/d of crude the last few months, according to JODI.

If runs remain at the same levels and the kingdom eliminates the crude it uses for electricity generation, that would imply about 10.1 million b/d of crude for export.

"It is not clear if the kingdom's production after April 1 is 12 million b/d of crude oil or if it includes condensate and NGLs," said Sara Vakhshouri, who heads the consultancy SVB Energy and closely follows the Saudi oil sector. "Also it's unclear for how long Saudi Aramco intends to produce 12 million b/d."

The planned production rise comes after OPEC and 10 allies failed earlier this month to agree on a deal to deepen production cuts to counter the coronavirus' impact on the oil market, prompting a price war to break out between Saudi Arabia and Russia.