Media reports are quoting an anonymous source as saying Saudi Arabia, the world’s leading oil exporter, supplied foreign and domestic customers with less crude during September even though its oil production was up slightly.
The source, identified only as being familiar with the Saudi oil industry, said it extracted, on average, 9.7 million barrels of crude each day of the month, a rise from 9.597 million barrels per day in August. At the same time, the source said, Saudi Arabia supplied customers with 9.36 million barrels per day in September, down from 9.688 million barrels per day the month before.
Sources – perhaps a single source – supplied the same data to several prominent news outlets, including Reuters, Bloomberg News and The Wall Street Journal.
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The informant offered no explanation for the drop in supply, but the news comes at a time when some members of OPEC, especially Venezuela, are urging Saudi Arabia to reduce extraction to help restore oil prices to levels above $90.
A reason suggested to The Wall Street Journal is that in the autumn, Saudi Arabia itself needs less oil to generate electricity for powering air conditioners as the weather cools, building oil reserves that will be in demand as other parts of the world face the cold of winter.
The price of crude has dropped dramatically in recent months due to a sharp rise in production in the United States and Russia, and China, with its slowing economy, is reducing its demand for oil. OPEC members Angola and Libya have joined Venezuela in urging the cartel to cut production. Venezuelan President Nicolas Maduro has publicly called for an emergency meeting of OPEC oil ministers.
OPEC’s next regularly scheduled meeting to review its production and marketing policies will be in Vienna, the cartel’s headquarters, on Nov. 27. For now, at least, the majority of its member nations have expressed no intention to raise prices.
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But in an e-mail to Bloomberg News on Oct. 22, Libyan OPEC representative, Samir Kamal, said the world oil markets have about 1 million barrels a day that they can’t buy, meaning OPEC must unite to cut its members’ output by a total of 500,000 barrels a day.
Kamal added that Libya itself should not be required to cut its own production because of the violent political conflict that has drained the country’s resources and impeded its ability to resume normal production. He stressed that this was his personal opinion, not that of the government he represents.
As for Saudi consumption of its own oil, it used 769,000 barrels per day of crude in August, down from 899,000 barrels per day during the previous month. Meanwhile, in August, Saudi exports of crude fell by 6.663 million barrels per day to 9.36 million barrels per day. It was their lowest level since 2011.
By Andy Tully of Oilprice.com
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