Saudi Aramco abandoned a plan to boost its production capacity to 13mm barrels a day, from 12mm barrels currently. Due to OPEC+ output cuts, Riyadh is well below its maximum output potential, currently pumping about 9mm barrels a day. The cancellation will likely to save Aramco somewhere between $20-40 billion in capex over the next five years. By scrapping the expansion plan, Riyadh has conceded what was already an open secret: There’s insufficient demand for so much extra Saudi oil in the foreseeable future. Riyadh appears determined – or resigned – to keep production lower-for-longer to keep oil prices higher-for-longer. Only if the kingdom were ready to accept much lower prices there would be demand for extra Saudi oil because, over time, investment would drop elsewhere, notably in the US shale industry. Saudi Arabia’s problem is that high oil prices encouraged – some would even say subsidized — surging production elsewhere, from the North Sea in the 1980s to the American shale basins in the 2020s.
- Date Posted:
- January 31, 2024
Chinese investors and households have been buying gold as a refuge from local property and stock market mayhem, helping to support record prices for the haven asset according to the World Gold Council. Chinese investment demand for gold — spanning bars and coins — grew 28% to 280 tonnes, largely offsetting a steep drop in Europe. The country’s jewelry consumption rose 10% to 630 tonnes last year, even as global demand remained flat.