The world's largest crude oil exporter, Saudi Arabia, has started to slash its crude exports after OPEC+ is now reducing its overall target production by 2 million barrels per day (bpd).
Initial tracking and estimates suggest that so far in November, Saudi Arabia has reduced its crude oil exports by more than 400,000 bpd, while exports from OPEC could be on course to drop by 1 million bpd, Bloomberg reported on Thursday, citing oil flow tracking data.
So far in November, Saudi Arabia's oil shipments have dropped by 430,000 bpd, according to data from Kpler cited by Bloomberg.
Petro-Logistics estimates that OPEC crude oil shipments are set for a 1-million-bpd drop.
In early October, OPEC+ announced a cut in its collective target by 2 million bpd beginning in November. Although the actual cut is expected to be around half that number, at 1.1 million bpd, it still is the biggest cut since the record production reduction announced in April 2020 when oil demand plunged at the start of the pandemic.
Saudi Arabia and its fellow Gulf OPEC members will be the ones to mostly shoulder the cut because they have more or less pumped to their respective quotas in recent months, unlike many other OPEC and non-OPEC members in the OPEC+ pact who have been lagging behind targets.
For November, and until OPEC+ decides otherwise, Saudi Arabia will have a production target of 10.478 million bpd, down by 526,000 bpd from 11.004 million bpd in October.
The lower exports from OPEC+ come just as the EU embargo and the G7-EU-UK price cap on Russian crude oil are set to come into force on December 5. OPEC and OPEC+ have justified the "pre-emptive" cut in production based on forecasts of slowing economies and oil demand. But analysts warn that the group may overtighten the market, in view of the huge uncertainties surrounding Russian oil supply in just three weeks' time.
By Charles Kennedy for Oilprice.com
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