Saudi Arabia will begin burning more crude oil to generate electricity than last year. The reason is the oversupply and lower cost of crude oil compared to fuel oil. About this informsReuters agency.
According to Wood Mackenzie, in 2025, Saudi Arabia will burn approximately 465,000 to 470,000 barrels of crude oil per day, which is 10,000 to 15,000 barrels more than in 2024. Another consulting firm, FGE, estimates this volume at 423,000 to 428,000 barrels per day, which is on par with or slightly higher than last year.
“Low oil prices and high profits from the sale of fuel oil are changing the structure of demand — part of the electricity generation will be transferred from fuel oil to burning crude oil.” – explained Preeti Mehta, senior analyst at Wood Mackenzie.
Vortexa Chief Economist David Weh noted that Saudi Arabia is interested in increasing oil production for domestic consumption, not for export. This increase in domestic use of oil in power plants may partially reduce concerns about the glut of the global oil market. Earlier, OPEC+ agreed to increase production by almost 1 million barrels per day in April, May and June.
High prices are expected to limit the use of fuel oil for power generation in the kingdom this summer. Countries in the Middle East traditionally use oil or high-sulfur fuel oil to generate electricity during the summer months, from June to August, when demand increases due to the use of air conditioners.
It will be recalled that OPEC+ is considering the possibility of accelerating the increase in oil production and may abandon a voluntary reduction of 2.2 million barrels per day by the end of October, if the cartel members do not improve compliance with their production quotas.
