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$100 Oil Is A Distinct Possibility

$100 Oil Is A Distinct Possibility

It is becoming increasingly likely…

Saudis Boost June Oil Production Close To All-Time High

Oil tanker

Saudi Arabia has increased its oil production this month by 700,000 bpd to 10.70 million bpd, very close to its highest-ever production of 10.72 million bpd from November 2016, a Reuters survey showed on Friday in a clear sign that OPEC’s largest producer is making up for supply drops elsewhere within the cartel.

Saudi Arabia’s previous production record of 10.72 million bpd was set in November 2016, just before the original OPEC and allies’ deal to curb production entered into force in January 2017.

According to OPEC’s secondary sources, Saudi Arabia pumped 9.987 million bpd last month, up by 85,500 bpd from April, but still below its 10.058-million-bpd quota.

“The Saudi number for June will be very, very high,” an industry source tracking Saudi Arabia’s oil production told Reuters on Friday. “Surprisingly high.”

Although Saudi production typically rises in the summer due to higher domestic crude oil demand for power plants, OPEC’s leader has also been boosting exports this month, according to the Reuters survey. Saudi Arabia’s crude oil exports rose to around 8 million bpd in June, according to a Reuters industry source. This export volume compares to 7.3 million bpd for April, the latest month for which official figures are available.

For July, the Saudis plan to pump around 11 million bpd of crude oil, an industry source familiar with the Kingdom’s production plans told Reuters earlier this week.

Related: Oil Rallies Towards $80

While Saudi Arabia and Russia managed to get OPEC and allies to agree to a vague statement that they would ease compliance to 100 percent from record-breaking more-than-100-percent compliance, the archrivals within OPEC—Saudis and Iran—have been in dispute over the meaning of that statement. Saudi Arabia says that it implies an indirect reallocation of production quotas, while Iran has been insisting that the latest agreement doesn’t mandate any producer to pump above their quota.

Saudi Energy Minister Khalid al-Falih said on Saturday that “Some of the countries ... are not going to be able to produce, so the others will. And that implies there will be indirectly a reallocation.”

But Iran’s OPEC governor Hossein Kazempour Ardebili strongly disagrees and told Reuters that “In the last meeting of OPEC, our resolution does not allow any member to produce more than their quota, but to try to reach 100 percent compliance.”

“The State Department says it is short and Saudi Arabia says they will produce 11 million bpd in July. I regret to say they both are ridiculing our organization,” Kazempour told Reuters.

By Tsvetana Paraskova for Oilprice.com

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  • citymoments on July 02 2018 said:
    With all due respects to the author, I would like to remind all parties concerned of the following two points: 1. My understanding about the news regarding Saudi June and July production increase is those figures reported was not official numbers, it is based on vague source like survey or industry person's views. It is definitely not announced by Saudi government officials, as matter of fact, the Saudi government will not make an announcement of such nature as they are bound by Recent OPEC meeting. 2. We must be aware of the fact that no one knows How much Saudi produces every month, Aramco is not IPO yet so they have no obligation to publish their production number. We may see Saudi supplies extra amount of crude in June and July, though whether those extra barrels of crude is from new production or from their storage reserve is subject to verification, anyone who jumps to make any simple conclusion is a fool indeed.
  • Mitch on June 30 2018 said:
    How kind of Saudi Arabia to bring OPEC back close to 100% compliance for June... it might have been quite a market shock with Venezuela's drastic drop in exports due to losing export facilities to ConocoPhillips, and Libya's export facilities going offline. Might still be at 150%, we shall see

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