Ryad (AFP)

Saudi Arabia announced on Monday that it intends to boost oil exports to a record level of 10.6 million barrels a day from May, in the midst of a price war with Russia and despite criticism.

At the same time, the price of a barrel continued to collapse, affected by the absence of an agreement between Ryad and Moscow and especially by the Covid-19 pandemic which drove the demand for black gold and weighed on the economy. the threat of a deep recession.

The world's largest exporter of crude oil, "the (Saudi) kingdom intends to increase its oil exports by 600,000 barrels per day from May, which will bring its (total) exports to 10.6 million barrels per day. day (mbd) ", said an official from the Ministry of Energy, quoted by the official SPA agency.

Saudi Arabia had already announced at the beginning of March an increase in its exports to 10 mbd per day for April following the failure of negotiations on the renewal of a reduction in production between the Organization of the Petroleum Exporting Countries ( OPEC) and Russia, intended to support prices.

The kingdom previously exported around 7 mbd as part of an agreement between the cartel and its partners, Moscow in particular.

- Hold the level -

After negotiations failed, Saudi Arabia cut prices sharply to gain additional market share, and announced production increases for April to 12.3 million barrels per day. The United Arab Emirates followed suit, pledging to pump at least one million barrels per day more from April.

Amin Nasser, managing director of the oil giant Saudi Aramco, said that this kingdom's economic gem can maintain production at this level for at least 12 months without having to build new facilities.

Existing infrastructure allows Saudi Arabia to extract its oil at low cost, but the kingdom's public revenues depend heavily on oil, and Ryad needs a high price to balance its budget.

Oil prices collapsed on Monday, following the fall of financial markets in the face of the worsening crisis linked to the Covid-19 pandemic. The price of a barrel of WTI, benchmark in the United States, fell to around 20 dollars, while that of a barrel of Brent of the North Sea was less than 23 dollars, levels seen more since the early 2000s.

Analysts expect the oil to collapse further, with storage capacity approaching its maximum capacity.

- Threat against renewables -

Saudi Arabia has ignored criticism that its aggressive strategy could bankrupt its rivals, saying it is no longer ready to play the role of market stabilizer on its own.

As part of the reductions decided by OPEC and its partners, the kingdom had assumed a major role and decided on additional cuts in its production in addition to those provided for in the agreement.

According to analysts, the latest developments are part of a deliberate long-term strategy aimed at conquering a larger market share in the face of its rivals who cannot bear the high production costs, notably the American shale oil producers.

By deciding to increase its exports, Ryad ignores more the call of the American secretary of state Mike Pompeo, launched to the crown prince Mohammed ben Salmane, to "reassure the energy and financial markets" vis-a-vis the looming world economic crisis.

US President Donald Trump, a close ally of Prince Mohammed bin Salman, and Russian President Vladimir Putin agreed on Monday to "Russian-American consultations on the subject between energy ministers".

Saudi Arabia "could theoretically be the last to stand, given its financial reserves and its ability to borrow if necessary," analysts at JBC Energy said.

In a letter to Mike Pompeo last week, a group of American senators accused Saudi Arabia and Russia of waging an "economic war in the United States".

But with low prices, Saudi Arabia will not only keep producers with high operating costs out of the market, it will also make competition from renewable energy with fossil fuels more difficult, at least in the short term. "said Bernard Haykel, a Saudi Arabian specialist at Princeton University.

© 2020 AFP