Saudi Arabia could ramp up oil production if sanctions force Russia to slash crude output, report says
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- If sanctions force Russia to cut oil production, Saudi Arabia could boost its own output, sources told the Financial Times.
- Oil prices fell on the report, while OPEC+ holds another monthly meeting Thursday to discuss production.
- Additionally, President Biden may visit Saudi Arabia soon to meet with leadership, Bloomberg reported.
Saudi Arabia has signaled to Western allies that it's ready to boost oil production if Russia slashes its output amid wartime sanctions, sources told the Financial Times.
Oil prices fell on the report but recovered from lows as OPEC+ holds another monthly production meeting on Thursday.
Concern over a more dire supply squeeze for crude oil has emerged since the European Union announced its partial Russian oil embargo on Tuesday, as well as a ban on insurance for Russian cargoes that could limit Moscow's exports to markets outside the EU.
Saudi Arabia is aware of the present risks in oil markets, "and that it is not in their interests to lose control of oil prices," a person familiar with the matter told the FT.
The Saudis previously resisted calls to boost production as it did not yet see a genuine shortage in the market and wanted to maintain spare capacity to respond to a real crisis, according to the FT.
However, the landscape could shift quickly and dramatically, given that China is starting to emerge from COVID-19 lockdowns and Russian output is struggling to rebound.
While nothing has been finalized, one source told the FT that Saudi Arabia could announce an immediate increase in production as soon as Thursday at the OPEC+ meeting.
OPEC and non-members like Russia previously agreed to gradually lift production, but some countries in the oil group have discussed excluding Moscow from its quota after it missed its target.
Meanwhile, amid soaring gas prices in the US, President Joe Biden could be gearing up to visit Saudi Arabia soon, Bloomberg reported Wednesday.
So far, Crown Prince Mohammed Bin Salam — the effective ruler of Saudi Arabia — has spurned Biden's calls, as the White House has said early on it would deal directly with Saudi Arabia's official head of state, King Salam bin Abdulaziz.
But with gas prices hitting record after record over recent weeks, pressure is mounting for Biden to meet with Bin Salam, Bloomberg reports. The US is staring down dwindling energy stockpiles, which have pushed up prices for diesel, natural gas, and jet fuel.
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