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Saudis Poised To Make Largest Crude Export Cut This Year

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Saudi Arabia plans to cut its August crude oil exports by 600,000 bpd, according to an industry source from the Kingdom who spoke to Reuters. The projected August cut would be the biggest since the start of this year, and comes as a result of peak domestic consumption during the summer. The reduction is also in line with Saudi Arabia’s production cut commitment under the international agreement sealed last November in a bid to rebalance the oil market.

The United States will get less than 800,000 bpd of Saudi crude next month, the source said, down from an average 1.154 million bpd in April – the last month for which there is official data from the EIA.

Shipments of Saudi crude to Asia will be around 3.5 million bpd, down by 200,000 bpd from July, and exports to Europe will be cut by 70,000 bpd to 520,000 bpd. Oil trading companies will receive 780,000 bpd, down by 200,000 bpd.

Overall, Saudi Arabia’s crude exports in August will be 6.6 million barrels daily.

Saudi Arabia pumped 10.07 million bpd last month, above its quota. The rise, the source said, was a result of higher domestic demand during the summer season. Under the OPEC/non-OPEC deal to cut production, Saudi Arabia pledged to take 486,000 bpd off its October 2016 level output and keep production at 10.058 million bpd. This is the first time since the agreement was signed that Saudi Arabia exceeded its allocated production quota. Related: Oil Rises Despite Gloomy Outlook

OPEC’s Monthly Oil Market Report with data for June¬—released today—showed that Saudi Arabia produced 9.95 million bpd, according to secondary sources—below its production quota. Total production according to figures directly reported to OPEC from the Kingdom, the report showed, came in at 10.07, confirming the earlier Reuters report.

The market will carefully scrutinize OPEC‘s Monthly Oil Report, but this report focuses on production numbers, not exports. According to ClipperData, OPEC’s exports—including those of Saudi Arabia—jumped in June, and the cartel exported more crude in June than it did in October, while total global crude exports are over 10 percent higher than year-ago levels.

By Irina Slav for Oilprice.com

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