Saudi Aramco directed to increase maximum sustainable capacity to 13 mil b/d

Dubai — Saudi Aramco has received a directive from Saudi Arabia's Ministry of Energy to increase its maximum sustainable capacity from 12 million b/d to 13 million b/d, according to a filing from the kingdom's stock exchange, Tadawul.

The announcement comes a day after Aramco said it will provide its customers with 12.3 million b/d of crude for April -- an increase of 300,000 b/d on its maximum sustained capacity of 12 million b/d.

The move will see Aramco draw down its storage. The state-owned oil giant's highest ever production was recorded at 11.09 million b/d in November 2018, according to its self-reported figures to OPEC. S&P Global Platts Analytics estimates sustainable Saudi crude production capacity at around 10.5 million b/d and current production at 9.75 million b/d.

"To reach a sustained peak production of 11.5 million b/d would take six months of investment into Aramco's onshore and offshore assets," said a source with knowledge of the matter. "It's about barrels. Aramco will be utilizing its inventory and likely also its trading activities to supplement the rest of the volumes," the source said.

Oil prices have plummeted after 23-member alliance of OPEC+, led by Saudi Arabia and Russia, failed on Friday to reach an agreement on extending or deepening oil production cuts of 1.7 million b/d that end in March, leaving members to pump at will starting in April.

The kingdom then launched a price war against Russia, offering its crude at large discounts to capture a greater share of markets across the globe.