(Adds finance minister comments)
DUBAI, March 18 (Reuters) - Saudi Arabia’s Energy Ministry said on Wednesday it had directed national oil company Saudi Aramco to keep supplying crude oil at a record rate of 12.3 million barrels per day (bpd) over the coming months.
Finance Minister Mohammed al-Jadaan later announced a nearly 5% cut in the state’s 2020 budget, amounting to 50 billion riyals ($13 billion), and said expenditures would be reassessed as low oil prices and the coronavirus outbreak threaten growth.
The world’s top oil exporter has said it would boost crude supply in April, and oil exports are set to top 10 million bpd from May, another record high.
Brent crude futures settled at $24.88 a barrel, down 51% since March 6 talks between OPEC and non-OPEC producers collapsed without a deal - the worse 10-day trading stretch since the contract’s launch in 1988.
Jadaan’s comments suggest Riyadh could maintain its survival-of-the-fittest oil strategy, by using its vast supplies - Saudi Arabia produces more than a tenth of global crude - and financial muscle to drive out higher-cost rivals.
On Monday, Aramco said it would likely sustain higher oil output planned for April in May, and that it was “very comfortable” with $30 a barrel, signalling it is prepared to live with low prices for a while.
Saudi Arabia said last week it would launch a programme to boost production capacity for the first time in over a decade, signalling to Russia and other rivals readiness for a long battle over market share.
The kingdom, OPEC’s de facto leader, wanted to deepen output cuts that had been in effect since January 2017 to support prices hit by the coronavirus pandemic, but Russia rejected further reductions.
As talks collapsed, Saudi Arabia was also imposing drastic measures to contain the coronavirus, which has infected 238 people in the country so far. It suspended the Umrah pilgrimage, froze international flights and brought most business activity to a halt.
Riyadh, which has been running a deficit since oil prices plunged in 2014, had announced a 1.02 trillion riyal ($272 billion) budget for 2020, which analysts said was based on an assumption of roughly $60 a barrel.
Revenues were forecast at 833 billion riyals, implying a budget deficit of 187 billion riyals, or 6.4% of gross domestic product. That could widen to 16.1% if oil prices average $40, according to Arqaam Capital. At $30, the deficit would hit 22.1% ($1 = 3.7530 riyals) (Reporting by Rania El Gamal and Nayera Abdallah; Editing by Jason Neely, Mark Potter and Peter Cooney)