Saudi Arabia has decided to halt  its oil capacity expansion plans as a result  of the global energy transition,  Prince Abdulaziz bin Salman, Minister for Energy revealed this on Monday.

According to him,  the kingdom has plenty of spare capacity to cushion the oil market.

The Saudi government on Jan. 30 ordered state oil company Aramco to halt its oil expansion plan and to target a maximum sustained production capacity of 12 million barrels per day (bpd), 1 million bpd below a target announced in 2020, which was set to be reached in 2027.

“I think we postponed this investment simply because…we’re transitioning,” Prince Abdulaziz bin Salman said at the IPTC petroleum technology conference in Dharan.

He added that Aramco has other investments to make, including in oil, gas, petrochemicals and renewables.

Saudi Arabia has said it aims to reach net zero emissions by 2060 and Aramco says it wants to reach net zero emissions from its own operations by 2050.

Prince Abdulaziz said that the kingdom had a “huge cushion” of spare oil capacity in case of major disruptions to global supplies caused by conflict or natural disasters.

Under cuts agreed between the Organization of the Petroleum Exporting Countries and allies led by Russia, or OPEC+, Saudi oil production is about 3 million bpd below its 12 million bpd maximum sustainable capacity, making it the world’s biggest holder of spare capacity.

“We are ready to tweak upward, downward, whatever the market necessity dictates,” Prince Abdulaziz said.

He criticised a decision coordinated by the International Energy Agency in 2022 to release oil  from emergency reserves to cool global prices after Russia’s invasion of Ukraine.

“Why should we be the last country to hold energy capacity, or emergency capacity, when it is unappreciated and when it is not recognised?”

Aramco chief executive Amin Nasser, speaking at the same event, said he expected oil demand to increase to 104 million bpd this year and to 105 million bpd in 2025, downplaying expectations that it will peak any time soon.