In a significant shift, the world's largest oil company, Saudi Aramco, has decided to abandon its strategy to increase oil production capacity. This unexpected move, reported by Bloomberg, marks a substantial reversal in oil markets and raises doubts about Saudi Arabia's outlook on future oil demand.

Currently, Saudi Arabia possesses a production capacity of 12 million barrels per day but is operating at around 9 million barrels per day following output cuts as part of the OPEC+ agreement.

Previously, the leading oil producer had expressed confidence in its ambitious project aimed at boosting capacity to 13 million barrels per day by 2027, citing escalating demand from countries like China and India.

Aramco has announced intentions to revise its capital spending projections, with details expected to be disclosed alongside its annual results in March. Analysts at Vanda Insights interpret this decision as a clear indication of the kingdom's recalibration of expectations regarding global oil demand growth.

This alteration in strategy could eliminate the anticipated supply cushion projected for the latter part of the decade, potentially unlocking additional resources for the government.

Moreover, Saudi Arabia anticipates an additional 1 million barrels per day becoming available for exports by 2030, following plans to discontinue oil consumption for power generation purposes.