Two government sources said that Oman would increase its oil production despite its budget cuts to tackle the impact of coronavirus.
The decision followed the fall of the Organization of Petroleum Exporting Countries and its non-member oil producer allies (OPEC+) discussion which resulted in the expiry of the oil output cuts this end-March.
Under the OPEC+ supply accord, Oman’s production quota is 961,000 bpd. It is the biggest Arab oil producer in the group which is not an OPEC member. But over the upcoming months, Oman will boost production to its full capacity of 1 million bpd, said an oil ministry official.
80% of Oman’s national budget is made of revenues from the hydrocarbon sector.
However, the move will face challenges as increasing production would need additional investment. The country has been pressured by low oil prices which then aggravated by the outbreak of coronavirus.
On Tuesday, the front-month Brent crude was traded at USD31.29/barrel at 13.30 GMT while Oman needs a break-even oil price of USD85.90/barrel.
Oman announced that it would cut all its ministries’ budgets for 2020 by 5% to support the increase in crude production.
Meanwhile, Oman’s semi-state-owned oil producer Petroleum Development Oman (PDO) said it would protect its operations in the outbreak of coronavirus. The company produces 630,000 bpd of oil and within five years, it will increase to 700,000 bpd.
