DUBAI, United Arab Emirates (AP) — An extra 500,000 barrels of oil promised by Saudi Arabia earlier this week is coming to the market soon, a gulf oil official said Friday. The prospect of more oil has sent crude oil prices lower.
Saudi Arabia will provide the majority of the new oil but other producers of the Organization of Petroleum Exporting Countries will participate in the production increase, the official said on condition he not be further identified.
He said Saudi Arabia is in intensive consultations with the OPEC producers participating in the increase to decide how much extra oil they will add and exactly when to do so. Non-OPEC Mexico also will add oil to the market, he said.
OPEC countries unwilling or incapable of taking part in the production increase will lose their share to others, the official said. He would not say which other OPEC producers would participate in the production increase.
The comments are an indication Saudi Arabia is serious about its pledge Monday that it soon will increase output by 500,000 barrels per day to cool prices that had been around $30 — and that the oil giant is willing to act with or without an OPEC consensus.
There had been skepticism the Saudis would carry through with their pledge after no new oil was seen on the market and many OPEC members criticized the Saudi comments.
The 10 other OPEC members reacted with anger and disbelief after Saudi Arabia said Monday it would add about 2 percent to the cartel's official output of 25.4 million barrels a day, saying they had not been informed and that an OPEC consensus was needed.
Except for Kuwait and the United Arab Emirates, no other OPEC members have enough surplus capacity to quickly raise their production levels.
Saudi Arabia, the world's top producer and exporter, has excess production capacity of 2.3 million barrels per day in addition to its current quota of 8.25 million, Saudi oil officials have said.
The Saudis announced their intention to hike production after it became clear that an increase of 708,000 barrels per day agreed on by OPEC oil ministers last month was not enough to drive down prices.
With the United States and other importers demanding relief, the Saudis want to open their taps further in hopes of trimming the price of the OPEC basket of seven different crudes to a more sustainable $25. The OPEC crude basket price was $28.92 on Thursday.
Saudi Arabia is a key ally of the United States, the world's largest oil consumer.