State-owned oil giant Saudi Aramco plans to sharply increase the amount it invests in energy production.
But anyone anticipating that this weekend’s announcement would lead to a quick drop in prices will be disappointed, as there is expected to be no instant surge in oil or gas production from Saudi Arabia.
Earlier today, Brent futures were ahead 3.72% at $111.94 a barrel.
Crude prices soared recently to highs of nearly $130, while UK natural gas prices hit a record high of 800p a therm on March 7.
The war in Ukraine and a reluctance to rely on Russia for oil and gas have added to the pressure to find additional sources of energy.
Goldman Sachs warned earlier this month that the world could be facing one of "largest energy supply shocks ever" because of the Ukraine crisis, while Barclays said oil prices in its worst-case scenario could top $200 a barrel.
The BBC says Saudi Aramco's move is likely to be welcomed by political leaders worried about the impact of high energy prices, although the boost to investment is aimed at increasing output over the course of the next five to eight years.
Saudi Arabia is the largest producer in the oil cartel Opec and by raising production it could help to reduce energy prices.
Last week, Prime Minister Boris Johnson visited Saudi Arabia to try to persuade the country to release more oil into world markets in the short term.
But Shadow Chancellor Rachel Reeves said the UK should be focusing on boosting domestic production of energy through new nuclear and onshore and offshore wind generation, to reduce reliance on states like Russia and Saudi Arabia.
"Getting to net zero is the mission of our generation," she told the BBC.
"We've got to do more to reduce our reliance on fossil fuels, which is why investment in homegrown electricity is so important."
Energy markets have been volatile during the pandemic, as sudden changes in economic activity have influenced both supply and demand.
In 2020, Saudi Aramco's profits dropped sharply as the world economy slowed.
But a reopening in many countries led to a sharp rise in energy prices in 2021.
Saudi Aramco's Chief Executive Amin Nasser is reported at the weekend to have criticised "totally unrealistic" plans to swiftly transition the world away from fossil fuels.
The company plans to increase its capital expenditure to £34billion-£38billion this year with further increases until the middle of the decade. Last year's capital expenditure was £24billion.
It would raise its crude oil "maximum sustainable capacity" to 13million barrels a day by 2027, the company said. It also aims to increase gas production by more than 50% by 2030.
The country produced just over 10million barrels of oil per day in February.
Saudi Aramco more than doubled its net profits to £83billion in 2021.
It plans to develop a significant hydrogen export capability and become a global leader in carbon capture and storage technology.
Meanwhile the UK's top stock index, the FTSE 100, ended Friday up 19 points at 7,404. Shortly after opening this morning, it was up just over one point at 7,406.
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