The Saudi state oil company Saudi Aramco is increasing oil production this month by a quarter compared to February. It is Saudi Arabia’s youngest step in the oil price conflict with Russia.
The Russians immediately responded with the announcement that they would also produce more oil. Russian Energy Minister Alexander Novak said he is open to negotiations. “We can come to new agreements,” he said.
With the announced increase, Saudi production will reach 12.3 million barrels per day in April. In turn, Russian energy minister Novak announced that Russia is rapidly expanding production by half a million barrels a day. Russia produced around 11.3 million barrels a day in February.
Since the outbreak of the new coronavirus, the demand for oil has fallen, and so has the oil price. Saudi Arabia, therefore, wants oil-producing countries to cut production to prevent a further fall in prices.
Because Russia refused, the Saudis decided on Monday to lower the asking price and increase production to put pressure on Russia with even lower oil prices.
The price of a barrel of crude oil fell more than 20 percent Monday after the Saudi announcement, the biggest drop in nearly thirty years. The prices picked up something again on Tuesday afternoon.