Saudi Arabia may boost oil production next year: Brokerage

Oil ship tanker transportation crude oil from refinery on the sea [Image source: Gettyimagesbank]

Saudi Arabia could boost oil production next year to ensure a greater share of global supply, according to a report released by a South Korean brokerage firm on Thursday.

Park Sang-hyun, an analyst at HI Investment & Securities Co., said that Saudi Arabia is less likely to continue its oil production cut due to its fiscal conditions and economy and the cut’s weaker impact on international oil prices.

Park noted that Saudi Arabia’s oil production was down by about 1.43 million barrels per day compared with the end of 2022 but for the Organization of Petroleum Exporting Countries (OPEC), the entire production was only down by 1.13 million barrels per day over the same period.

“Most of the OPEC oil producers other than Saudi Arabia are raising oil production,” Park said.

The U.S. West Texas Intermediate (WTI) crude futures for January delivery dropped to below $70 per barrel following the sudden plunge of global oil price on Wednesday.

With the United States and Russia expected to raise oil production in 2024, such forecasts could add pressure on Saudi Arabia’s production cut, Park said.

“Saudi Arabia is also increasing fiscal spending for significant projects while facing a decline in oil-related fiscal revenues due to production cuts,” he added.

The developments show that Saudi Arabia could choose to boost production to exert pressure on U.S. shale oil suppliers, Park said.