Saudi Aramco to cut supply to 8.5 million bpd from May

The oil giant’s move comes after historic Opec+ deal to slash worldwide production

Aramco's cut starting May 1 is almost 4 million a day below planned sales in April. Photo: Reuters

Saudi Aramco will provide its customers with 8.5 million barrels of crude oil per day starting on May 1, the company said in a statement on Friday to Tadawul Stock Exchange, where it is listed.

The cut is almost 4 million a day below planned sales in April.

In March, the state oil giant had said it would be raising its output in April to a record 12.3 million bpd in a fight for market share with Russia that has hammered oil prices, as lockdowns aimed at containing the coronavirus cause the biggest demand slump in history.

Aramco’s latest move follows a historic deal reached by the Organisation of the Petroleum Exporting Countries (Opec) and its allies, on April 12.

The 23-nation Opec+ coalition agreed to slash production by an unprecedented 9.7 million bpd – or about 10 per cent of global supply – from May to the end of June.

Brent crude prices have dropped by almost 70 per cent from highs of $68.71 per barrel in January to $22.71 at the end of last month. Prices hit a fresh 18-year low below $19 a barrel on Friday.

Meanwhile, Saudi Arabia and Russia signalled they may be open to further output cuts as the deal failed to stem crude’s downward spiral.

The two nations will “continue to closely monitor the oil market and are prepared to take further measures jointly with Opec+ and other producers if these are deemed necessary," Russian Energy Minister Alexander Novak and his Saudi counterpart Prince Abdulaziz bin Salman said in a joint statement on Friday published after a phone call.

Opec projected on Thursday that even full implementation of the cuts will not prevent a surplus in the second quarter. Earlier this month the Opec Secretary General Mohammed Barkindo said demand for the second quarter alone is expected to contract by 12 million bpd.