Saudi Arabia will boost its crude oil production in the coming months as it expects stronger demand, Oil Minister Khalid al-Falih said this weekend, as quoted by S&P Global Platts, after President Trump last week lashed out at OPEC again for allowing prices to rise too high.
Al-Falih added, however, that production levels will be determined by customer demand and will not be a concerted effort to influence prices. Many would smile ironically at this statement, but it has been Riyadh’s official line that demand is the only factor determining production.
Saudi Arabia pledged in June to increase its crude oil production to help rein in prices, but July saw disappointing daily figures at 10.29 million bpd. In August production rose further, to 10.42 million bpd and this month, said Al-Falih, it will be even higher.
"Our plan is to respond to demand. If demand [for Saudi crude] is 10.9 million b/d you can certainly take it to the bank that we will meet it. But the demand is 10.5 million b/d or 10.6 million b/d. I think October will be more than this," Al-Falih said, speaking on the sidelines of an OPEC meeting in Algiers.
The minister said some clients were already asking for more shipments than they had originally contracted with Aramco, and Al-Falih assured them these additional shipments will be made. At the same time, the Kingdom is stocking up on crude oil at home at abroad, even though overall inventories have been falling sharply recently, raising doubts about Saudi Arabia’s statements that it has enough spare capacity to respond to higher demand after the Iran sanctions kick in in November.
Data from the Joint Organizations Data Initiative showed Saudi Arabia had about 229 million barrels of crude in stock as of July—the lowest since October 2009, S&P Global Platts notes. In July, drawdowns from these inventories averaged 178,000 bpd, up from just 15,000 bpd in the previous month and additions of 30,000 bpd in May.
By Irina Slav for Oilprice.com
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