Oil giant Saudi Aramco suspends planned increase in production capacity

Saudi state-owned oil company Saudi Aramco has suspended its plan to increase its maximum production capacity from 12 to 13 million barrels per day. The company announced today that it had received a directive from the energy ministry to keep capacity at its current level.

According to CNBC, the news comes amid growing concerns about the outlook for global oil demand. These concerns stem from global efforts to reduce carbon emissions, which are weighing on long-term investment in fossil fuel production.

Aramco said today that it would present an updated outlook for its capital expenditure when it publishes its financial results for last year in March. It did not comment on the reasons for the government directive to maintain current production capacity.

Saudi Aramco is the world’s largest oil producer, accounting for around ten percent of global production. The state holds an approximately 98 percent stake in the company.

Saudi Arabia, a key member of the Organization of the Petroleum Exporting Countries (OPEC), voluntarily cut production by one million barrels per day last July. This voluntary cut complements a broader agreement by the OPEC cartel and its allies, including Russia, to curb supplies to the market, with the aim of supporting oil prices and preventing supply from exceeding demand. In November, Saudi Arabia said it would extend the voluntary production cut through the end of March.