Saudi Arabia has cut crude oil exports by 3.8 percent in January in accordance with the deal the country negotiated between members of the Organization of Petroleum Exporting Countries, Bloomberg reported today.
The reduction brought Saudi exports down to 7.7 million barrels per day in January, bringing global markets one step forward in reversing the supply glut that has plagued markets for the past two years, according to data from the Joint Organizations Data Initiative.
Total crude output declined to 9.75 million barrels per day – the lowest level since February 2015.
The November deal between members of OPEC and eleven NOPEC nations promised 1.8 million barrels per day of cuts in the first half of 2017. So far, Saudi has been lifting the weight of OPEC countries that have cut less than they committed, which boosts the bloc’s aggregated compliance. The KSA had technically only signed off on cutting production to 10.058 million barrels per day.
No such united front exists amongst NOPEC countries, causing their compliance rate to hang in the 66th percentile.
"This is a strong sign that Saudi Arabia is committed to rebalancing the market," Mohamed Ramady, an independent analyst from the United Kingdom who used to teach economics in Saudi Arabia, told Bloomberg. "Yet, this might not be enough to quicken the recovery process as crude in storage worldwide is still high. They might need to reduce shipments more or extend this beyond June."
Related: Saudi Arabia Tries To Reassure Markets After Oil Price Plunge
The KSA needs market prices to recover before its Saudi Aramco initial public offering, set to take place next year. The $1 trillion-listing would be a big boon to any stock exchange that ends up being its host, though no final decisions regarding the matter have been made. The royal family says the proceeds of the partial sale of the company will be used to diversify the nation’s economy away from oil and gas.
By Zainab Calcuttawala for Oilprice.com
More Top Reads From Oilprice.com:
Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on…