Saudi Arabia’s energy ministry has directed oil producer Saudi Aramco to raise its output capacity to 13 million from 12 million barrels per day (bpd), CEO Amin Nasser said in a statement on Wednesday.

“The company is exerting its maximum efforts to implement this directive as soon as possible,” Nasser added.

No timeframe was given for the plans, which would entail investing billions of dollars to increase the ability to pump more oil.

Saudi Arabia said on Wednesday it plans to boost oil production capacity for the first time in more than a decade, a day after it announced a record high hike in crude supply in a battle for market share that has hammered global prices this week.

On Tuesday Saudi Arabia said it would boost its oil supplies to a record high in April, raising the stakes in a standoff with Russia, with Riyadh effectively rebuffing Moscow’s suggestion for new talks to limit output and boost prices.

Brent crude was trading at $36.77 per barrel, down 1.2 per cent, at 0733 GMT on Wednesday.

Wednesday’s announcement could be seen as another step in an escalating price war with Moscow after the collapse of an oil supply cut pact between Opec and Russia last week.

Much of Saudi Arabia’s international influence has derived from a role often described as the oil equivalent of a major central bank. It holds nearly all of the world’s spare capacity — an emergency reserve that allows the kingdom to step up output to cover shortfalls in other countries.

State-backed Saudi Aramco said it would increase crude oil supply in April to 12.3 million bpd, or 300,000 bpd above its maximum production capacity.

There was a 25 per cent slump in crude prices on Monday, triggering panic selling on Wall Street and other stock markets already badly hit by the coronavirus outbreak.

Saudi Arabia has been pumping around 9.7 million bpd in the past few months, but has extra production capacity it can turn on. It also has hundreds of millions of barrels in store.

Moscow said Russian oil companies might boost output by up to 300,000 bpd and could increase it by as much as 500,000 bpd, sending the Russian rouble and stocks plunging.

Russia rejected Opec’s call to deepen supply cuts, prompting Opec to scrap all production limits and Russia to say it would also boost output.

Shares in Aramco rebounded on Tuesday after they fell by as much as 10 per cent on Monday, dropping below their price in December, when the world’s biggest oil company was first listed on the Riyadh stock exchange. On Wednesday they were trading at nearly 31 riyals per share, still below the IPO price of 32 riyals.

Saudi Arabia last embarked on a $100 billion push to raise its capacity more than a decade ago amid a price boom fuelled by China’s growth. Since then, Saudi officials have brushed aside questions of new upstream investment to boost capacity.

After finishing the kingdom’s programme to add nearly 4 million bpd of capacity in 2009, Saudi officials and oil company executives have talked on and off about the possibility of targeting another boost to 15 million bpd by 2020, but those plans were shelved several years ago as demand growth cooled.

Not that the kingdom has been idle. It has been investing billions of dollars in maintaining about 1.5-2 million bpd of output cushion to use in case of any global disruptions. In 2012, it has launched a $35 billion five-year exploration and production investment plan meant to sustain current capacity.

Meanwhile the Saudi Aramco plans to invest $110 billion to develop unconventional gas reserves in Saudi Arabia’s Jafurah field, the state news agency SPA said.

It said the development plans were reviewed by the Saudi High Commission for Hydrocarbons in a meeting chaired by Crown Prince Mohammed bin Salman.

The Jafurah deposits are estimated to hold 200 trillion cubic feet of wet gas and the phased development of the field is expected to gradually increase production to 2.2 trillion cubic feet by 2036 if fully completed, SPA said.

It said the field was expected to produce 130,000 barrels per day of ethane and 500,000 bpd of gas liquids and condensates.

Prince Mohammed said development of the field would over 22 years provide the government with an annual net income of $8.6 billion and contribute $20 billion to the kingdom’s gross domestic product per year, according to the agency.

Jafurah is southeast of Ghawar, the world’s largest conventional oilfield.

Aramco has identified huge gas resources in the country, the world’s top oil exporter, and is working to develop unconventional reserves in South Ghawar and Jafurah deposits in eastern Saudi Arabia, a Saudi official said previously.

Agencies