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Saudi Arabia has begun cutting oil exports in addition to cutting oil production, according to new April shipping figures released by ClipperData.
The numbers show that the KSA cut exports by 670,000 bpd in April, which represents the sharpest drop in 2017 and a U-turn in the country’s export trend so far.
Members of the Organization of Petroleum Exporting Countries (OPEC) – of which Saudi Arabia is the de facto leader – have achieved compliance of over 100 percent to their deal to cut production by 1.2 million bpd in the first half of 2017. Still, export levels, and thus, global inventories, have remained high, mitigating the intended effects of the output cuts.
Total OPEC exports via sea vessels in March stood just above levels in October, just a month before the bloc agreed on the terms of the production reduction deal.
Low oil prices have prompted countries to stockpile fuel supplies while rates are low. A new report from the International Energy Agency says inventories in developed countries were 336 million bpd higher that the five-year average in February.
"It's all about this meeting on May 25, and so they'll be going into that meeting knowing that they have cut exports by far more than they said they would. [They'll] go in there and bang the table and try to get everyone else in line," said Matt Smith, commodity researcher at ClipperData.
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Saudi Arabia is particularly interested in seeing exports fall and prices rise as it prepares for the initial public offering of its massive national fossil fuel company. The sale of 5 percent of Saudi Aramco’s shares will fund Riyadh’s economic diversification blueprint for the next two decades, as outlined by the royal family’s Vision 2030 plan.
By Zainab Calcuttawala for Oilprice.com
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Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on…