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Why Saudi Arabia Cut July Oil Production

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Saudis To Maintain Q1 Crude Oil Exports Around 7 Million Bpd

oil tanker at sea

Despite planned refinery shutdowns for maintenance at home, Saudi Arabia plans to keep the low level of its crude oil exports in the first quarter this year at around 7 million bpd, industry sources told Reuters on Wednesday, in a sign that OPEC’s leading producer is committed to keeping supply tight in hopes of erasing the global glut.

Saudi Arabia also plans to keep its crude oil production at some 9.8 million bpd, Reuters’ source said. This is below Saudi Arabia’s ceiling of 10.058 million bpd in the production cut deal between OPEC and its non-OPEC allies led by Russia. The Saudis have been overcomplying with their share of the cuts for most of last year, and it looks like they will continue to do so.

In December 2017, Saudi Arabia’s crude oil production declined by 10,900 bpd from November to stand at 9.918 million bpd, according to OPEC’s secondary sources.

In exports, the Saudis were planning to keep January shipments at 6.9 million bpd, while in December, Saudi Arabia had cut total crude oil exports by 120,000 bpd from just above 7 million bpd in November, cutting shipments to all regions, including a more-than-10-percent reduction of oil exports to the U.S.

Related: The Biggest Oil Collapse In History

Saudi Arabia’s crude oil exports last month dropped to 6.6 million bpd, down from 7.18 million bpd in November, according to tanker tracking data cited by Bloomberg. The six Middle Eastern OPEC producers—Saudi Arabia, Iraq, the UAE, Iran, Kuwait, and Qatar—saw their combined exports in December at the lowest level since August, the vessel-tracking data compiled by Bloomberg showed.

Two weeks ago, a senior OPEC source told Reuters that the Persian Gulf OPEC producers were planning to keep their oil production in Q1 2018 lower than the levels in the same period last year, despite strong global oil demand growth and dropping inventories.

“Gulf oil producers want to make sure that the excess in commercial oil inventories which was built over the past three years will be wiped out completely,” the source told Reuters.

By Tsvetana Paraskova for Oilprice.com

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