Schlumberger Limited (NYSE: SLB) and other oilfield services providers witnessed a decline in their stock values after Saudi Aramco announced its decision to keep its oil production capacity steady at 12 million barrels per day, canceling a planned increase.
The government of Saudi Arabia has instructed Aramco, the world’s leading oil producer, to restrict its oil production to 12 million barrels per day, as announced on Tuesday.
Aramco has received a directive from the government to maintain its Maximum Sustainable Capacity (MSC) at 12 million barrels per day despite efforts to increase it to 13 million barrels per day. The MSC represents the daily average volume of crude oil that could be extracted over one year.
The state-owned enterprise has not revealed the rationale behind the Ministry of Energy’s directive. However, it has announced plans to revise its capital spending guidance when it releases its full-year 2023 results in March. Aramco is strategically poised to augment its oil output to 13 million barrels per day by 2027.
In 2019, Aramco set a record by raising $29.4 billion through an initial public offering. The company’s substantial oil production is a primary factor in Saudi Arabia’s dominance within the Organization of the Petroleum Exporting Countries. However, the U.S. has steadily increased its oil production over time, now standing as the world leader in this sector.
The limitation on Aramco’s output coincides with a deceleration in oil demand growth to pre-pandemic levels last year. The International Energy Agency, in its monthly report, projected a slowdown in growth to 1.2 million barrels per day in 2024, down from 2.3 million barrels per day in the previous year.
Schlumberger (NYSE: SLB) Stock Performance
SLB stock plunged -7.24% on Tuesday. The traders had exchanged hands with 46,999,716 (46.99 million) shares compared to the average daily trading volume of 10.19 million.
