Saudi Arabia's oil giant, Aramco, has announced a delay in its plan to increase crude oil production capacity from 12 million barrels per day to 13 million barrels per day. This decision comes amid widespread market concerns about the future of global oil demand. Although the reasons for the delay were not disclosed, Aramco intends to update its capital spending guidance next month.
Global oil prices, which initially rose more than 1% after militant attacks in Jordan, have weakened again earlier this week. The price of Brent crude, the global benchmark, fell by 1.38% to USD 82.40 per barrel, while the price of West Texas Intermediate (WTI) crude oil dropped by 1.58% to USD 76.78 per barrel. Factors influencing this include concerns over China's debt after a Hong Kong court ordered the liquidation of China Evergrande, the world's most indebted property developer.
Global oil demand is projected to increase in 2023, but reports from the International Energy Agency (IEA) indicate a slowdown in growth in the fourth quarter of 2023, particularly in Europe. Aramco's decision to postpone production increases reflects market uncertainty and the push to adjust strategies to global economic conditions.
While geopolitical tensions in the Middle East affect the market, concerns about China's economy and its impact on oil demand remain the main focus of market participants. The looming war and the potential decrease in oil demand from the world's largest contractor, China, create an influential atmosphere on global oil prices. Aramco will monitor these developments and provide further updates next March.