Saudi Arabia has been encouraing members of the Organisation of the Petroleum Exporting Countries (OPEC) and other producers such as Russia, known as OPEC+, to incerase output in the face of the coronavirus pandemic, the Financial Times reports on Wednesday.
According to report, Saudi Arabia plans to keep oil production steady despite a recent slump in prices, fearing any bigger output cuts would lead rivals in OPEC to fill the void.
By highlighting the country’s fear, the report says if it cuts output further to support prices, other countries will take advantage and produce greater amounts, jeopardising the unity of the OPEC+ group that enacted record supply cuts in April as demand collapsed.
According to the experts, global oil demand is still down by almost ten per cent year-on-year, as many economies are mired in recession and car and airline travel remain depressed.
In March, Russia and Saudi Arabia were locked in a price war, as a dispute over who was to blame for plunging prices of crude oil intensified. Both were set to cut production in efforts to protect the market, with Saudi Arabia alone set to cut output to 8.5 million barrels a day – the country’s lowest since 2011.