Saudi govt directs Aramco to limit refining capacity to 12 million barrels a day

Saudi Arabia's government on Tuesday ordered state oil company Aramco to halt its capacity expansion plan and to rein in production to a sustainable level of 12 million barrels per day (MPD), a million bpd below the 13 million target announced in 2020.

Saudi Arabia, which has been maintaining a spare oil capacity for decades, thereby providing a cushion in case of major disruptions to global output, including those caused by conflict or natural disasters. 

Aramco has been following a policy attuned to the market, even as it had its base in sustainable oil production. The company said the decision to lower refining target in no way reflected a change of view on future oil demand.

In a brief statement, issued on Tuesday, Aramco said it has received a directive from the Saudi ministry of energy to abandon a planned capacity hike to 13 million barrels per day (MMBD) and maintain its maximum sustainable capacity (MSC) at 12 million barrels per day.

Aramco did not give a reason for the government‘s decision, which, under prevailing market conditions, could act as a stabiliser in a declining market. Benchmark Brent crude traded around $81 a barrel, as oil prices cooled.

Aramco, meanwhile, reported annual profit of $161 billion in the year 2023, which, the company said, is the highest-ever profit recorded by a publicly listed company.

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