Saudi Arabia continues to signal to the market that it is not backing down from the oil price war despite the crumbling oil prices amid coronavirus-hit demand and promises of huge extra supply next month.

Oil giant Saudi Aramco will proceed with the reduction of its refinery rates in Saudi Arabia in April and May in order to free up more crude oil for exports, an official at the company told Reuters on Thursday.

Saudi Arabia will continue to supply a record 12.3 million barrels per day (bpd) to the oil market in the coming months, as per order from the energy ministry, the official Saudi Press Agency reported on Wednesday.

The Kingdom is intent on unleashing growing crude oil volumes on the market, aiming to significantly boost its crude oil exports to a record-breaking more than 10 million bpd in May.

The Saudis, who launched an all-out price war for market share with Russia after Moscow refused to back deeper cuts, will not only boost April exports from the current 7 million bpd, but will also grow exports in May by another 250,000 bpd from April.

After the collapse of the OPEC+ production cut deal, OPEC’s de facto leader and the world’s top oil exporter, Saudi Arabia, promised to flood the market with crude oil as of April 1, sending oil prices into a tailspin and weighing heavily on the market which is being battered by an unprecedented demand shock amid the coronavirus pandemic.

Oil prices naturally reacted to this double whammy of supply and demand shock and crashed to 18-year lows on Wednesday.

Analysts say that $20 oil may not be the bottom as the markets continue to panic with a growing number of countries going into lockdown and restricting domestic and international travel.

Some analysts say oil prices in the teens are not far off, while Paul Sankey, managing director at Mizuho Securities, said “Oil prices can go negative” in a note this week, as carried by Fox Business.

By Tsvetana Paraskova for Oilprice.com

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