The world's top oil exporter, Saudi Arabia, saw its crude oil exports in June drop to their lowest on record at just below 5 million barrels per day (bpd), as OPEC's de facto leader led efforts from the OPEC+ group to withhold a record amount of crude from the market in response to the crash in demand.
According to data from the Joint Organisations Data Initiative (JODI), Saudi Arabia's crude oil exports plunged by 17.3 percent in June compared to May, to stand at 4.98 million bpd.
Since March this year, Saudi crude oil exports have diverged a lot from the latest five-year range, jumping to more than 10 million bpd in April, when the Kingdom made good on its promise to flood the market with oil after the collapse of the previous OPEC+ deal. Saudi Arabia exported a record 10.237 million bpd in April 2020, up from 7.391 million bpd in March, JODI data showed earlier this year.
In May, Saudi crude oil exports plunged to 6.02 million bpd from more than 10 million bpd in the previous month, after OPEC+ reached a new deal to prop up the market and erase the glut that was building while global demand was crashing by 20 million bpd in April.
June was also the month in which Saudi Arabia voluntarily slashed its oil production by an additional 1 million bpd on top of the 2.5 million bpd it was supposed to cut.
Total Saudi oil exports, including crude oil and oil products, fell further month-on-month in June - by 1.41 million bpd to 6.07 million bpd, according to the data released by the JODI database, which collects self-reported figures from 114 countries.
Despite the easing of the OPEC+ cuts as of August 1, Saudi Arabia has signaled it would not rush to ramp up its crude oil exports significantly this month.
By Tsvetana Paraskova for Oilprice.com
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Comments
Still, Saudi Arabia is desperate to have prices rise above $60 a barrel as soon as possible. This will help reduce a mushrooming budget deficit which could far exceed my original estimate of $116 bn and reach a historic high of $150 this year forcing Saudi Arabia to borrow from the international money markets in order to safeguard its financial reserves estimated at $400-$425 bn.
And while the slow rise of oil prices is very frustrating for Saudi Arabia and other OPEC+ members, the fundamentals are moving in the right direction.
Oil prices are projected to hit $45-$50 a barrel during this half of 2020 and touch $60 in early 2021 bolstered by a steady decline in the glut, an accelerating rebound by China, a global economy starting to open up and a decline in US oil output estimated at 6.4 million barrels a day (mbd) so far this year. In other words, the ability of US shale oil to have a significant influence on oil prices has diminished considerably and this will be the case for the coming years. The shale bubble has burst.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London