Despite higher requests from customers, Saudi Arabia will be keeping its April crude oil exports at below 7 million bpd, a Saudi official told Reuters on Monday, signaling that OPEC's biggest producer is set to do 'whatever it takes' to rebalance the market and support oil prices.
Saudi Aramco will be keeping its crude oil exports this month and next at below 7 million bpd, the Saudi official said, noting that despite requests for more than 7.6 million bpd of Saudi oil for April, the state oil giant will ship below 7 million bpd to clients next month-"a deep cut of 635,000 bpd from customer requests for its crude oil."
The lower allocations by Saudi Aramco will also mean that the Kingdom's oil production will be "well below 10 million bpd" in April, the official told Reuters.
Under the OPEC/non-OPEC deal for a total of 1.2 million bpd cuts between January and June, Saudi Arabia's share is a cut of 322,000 bpd from the October level of 10.633 million, to reduce output to 10.311 million bpd.
Saudi Arabia pumped 10.1 million bpd of crude in February, a Saudi official told S&P Global Platts on Friday, in yet another sign that OPEC's largest producer and de facto leader is cutting much deeper than it had pledged under the OPEC+ production deal. Related: Is Norway's Oil & Gas Selloff A Mistake?
In an interview with the Financial Times in February, Saudi Arabia's Energy Minister Khalid al-Falih said that the Saudis would further cut production to around 9.8 million bpd in March, some 500,000 bpd below the commitment in the OPEC+ deal. Al-Falih also said that Saudi Arabia would be cutting its crude oil exports to near 6.9 million bpd in March, slashed from 8.2 million bpd just three-four months ago.
Speaking to Reuters over the weekend, al-Falih said that April would be pretty much the same as March in terms of the Kingdom's production and exports, with production in April expected to be kept at the March level of 9.8 million bpd.
In their push to rebalance the oil market and firm up oil prices, the Saudis are also significantly reducing exports to the most transparently reported oil market, the United States. Saudi Arabia's crude oil exports to the U.S. are falling sharply, with shipments standing at just 1.6 million barrels near the end of February, according to U.S. customs data compiled by Bloomberg, versus 5.75 million barrels a year ago.
By Tsvetana Paraskova for Oilprice.com
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Comments
Three bullish factors are currently at play. One is strong indications of the imminent end of the trade war between the US and China.
A second factor is that the OPEC+ production cuts and the strict adherence by the producers are effectively reducing the glut in the market with the possibility that OPEC+ could extend the production cuts to the end of the year if needed to ensure that the market becomes irrevocably balanced.
A third factor is a surge in China’s crude oil imports projected to hit 11 million barrels a day (mbd) this year. This is not a sign of a slowing down Chinese economy.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London