"Saudi Arabia's oil minister confirmed plans to boost the kingdom's production capacity by as much as 14%, to 12.5 million barrels a day, during the next few years, in a bid to keep up with surging demand and fortify the nation's influential role as the world's producer of last resort.
Ali Naimi pledged to steadily match oil-demand growth with increases in output capacity. The commitment is a significant step for Saudi Arabia, which has long signaled to world markets that it can easily raise output to meet growth in demand. But it has balked at setting concrete targets or time lines.
To some extent, Mr. Naimi continued to hedge his bets yesterday, saying the kingdom would increase capacity gradually and in step with demand growth, keeping spare capacity at 'no less than' 1.5 million barrels a day above current production levels. He didn't indicate whether the kingdom already had started boosting capacity above the current level of about 11 million barrels a day.
But he indicated for the first time that Riyadh's political leadership had committed to the large-scale capital-investment program needed to fund a big boost. 'Fields and reservoirs for the [expansion] program have already been identified, and the decision to invest in added production capacity on this scale reflects our belief that demand for Saudi oil will continue to increase,' he said."
1.5 Million barrels per day sounds like a lot, but at the current rate of growth in demand that may be just able to keep pace with the demand.