Saudi Arabia’s state-controlled Aramco announced on Tuesday that it is putting on hold its plans to raise its crude production capacity. The company had initially aimed to increase capacity from 12 million barrels per day to 13 million barrels per day. This decision comes amidst growing uncertainties about the future of oil demand.

In a statement, the world’s largest crude exporter explained that the Saudi ministry of energy has ordered them to maintain their Maximum Sustainable Capacity (MSC) at current levels. This directive comes after several years and significant investments aimed at increasing production capacity by 2027.

Aramco, which went public in 2019, did not provide any specific reasons for the ministry’s decision. However, the company stated that it will update its capital spending guidance when it announces its full-year 2023 results in March.

As of 7:02 a.m. London time, Brent crude prices for March delivery were up 0.24% from the previous close at $82.60 per barrel. WTI contracts for March delivery also saw an increase of 0.35% and were priced at $77.05 per barrel.

This announcement by Aramco comes at a time of growing concerns about the future of oil demand globally. The ongoing transition towards decarbonization has cast a shadow over long-term investments in fossil fuels.

According to the International Energy Agency’s annual report published in December, global oil demand is projected to have risen by 2.3 million barrels per day in 2023, reaching 101.7 million barrels per day. However, the IEA also noted that this growth is influenced by the weakening macroeconomic climate.

The IEA stated, “Global 4Q23 demand growth has been revised down by almost 400 kb/d, with Europe accounting for over half of the decline. The slowdown is expected to continue in 2024, with global gains halving to 1.1 mb/d, as GDP growth remains below trend in major economies.”