Saudi Arabia raised oil production to an all-time high in November, an industry source said on Monday.
The development came, when President Donald Trump piled pressure on the kingdom to refrain from production cuts at an OPEC meeting next week.
The meeting, at which OPEC members will consider how to arrest a decline in oil prices, comes days after leaders of top global oil producers – Russian President Vladimir Putin, Saudi Crown Prince Mohammed bin Salman and Trump – travel to Argentina for a G20 summit this week.
Saudi Arabia agreed to raise supply steeply in June, in response to calls from consumers, including the United States and India, to help cool oil prices and address a supply shortage after Washington imposed sanctions on Iran.
But the move backfired on Riyadh after Washington imposed softer than expected sanctions on Tehran.
That triggered worries of a supply glut and prices collapsed to below $60 per barrel on Friday from as high as $85 per barrel in October.
The industry source, who is familiar with the matter, said Saudi crude oil production hit 11.1-11.3 million barrels per day (bpd) in November, although it will not be clear what the exact average November output is until the month is over.
Those levels are up around 0.5 million bpd – equal to 0.5 per cent of global demand – from October and more than 1 million bpd higher than in early 2018, when Riyadh was curtailing production together with other OPEC members.
Non-OPEC Russia, which teamed up with Saudi Arabia in the first OPEC joint production cuts since 2016, has also raised production steeply in recent months to a post-Soviet high of 11.4 million bpd.
Analysts at Goldman Sachs, one of the most active banks in commodities, said the G20 meeting could be a catalyst for prices to rebound.
“We expect an OPEC cut and its announcement to lead to a recovery in (Brent) prices,” the bank said in a note.
Saudi oil industry sources have signaled they wanted prices to stay above 70 dollars per barrel and Saudi energy minister Khalid al Falih said this month global oil supply could exceed demand by over one million bpd by 2019, requiring OPEC to take action.
Falih said earlier this month that state oil giant Saudi Aramco would ship 0.5 million bpd less crude in December than in November as demand from customers was lower.
Possibly complicating Saudi decisions on oil output is the crisis around the killing of journalist Jamal Khashoggi at Riyadh’s consulate in Istanbul last month.
Trump stood behind Saudi Crown Prince Mohammed bin Salman despite calls from many U.S. politicians to impose stiff sanctions on Riyadh.
Prince Mohammed is the ultimate Saudi oil policy maker and Saudi watchers have said the Prince will try to avoid confrontation with Washington, including on oil prices.
The U.S. is not a member of OPEC and is not participating in the output reduction.
Trump has repeatedly called on OPEC to refrain from cuts and has raised pressure on the group in the last few days.
On Sunday, Trump thanked himself for lower oil prices and compared it to a big tax cut for the U.S. economy.
“So great that oil prices are falling (thank you President T),” Trump tweeted, referring to himself.
On Nov. 21, Trump tweeted: “Oil prices are getting lower… Thank you Saudi Arabia but let’s go lower”.
