Saudi Arabia to cut oil exports in April

Saudi Arabia’s reduction in crude oil exports comes as part of output cuts by OPEC to support prices and rebalance the market. Getty Images. (Getty Images)
Updated 12 March 2019

Saudi Arabia to cut oil exports in April

  • State-owned Saudi Aramco’s oil allocations for April are 635,000 bpd below customers’ nominations, which are the requests made by refiners and clients for Saudi crude
  • Oil prices have been supported this year by output cuts by the Organization of the Petroleum Exporting Countries and its allies

DUBAI: Saudi Arabia plans to cut its crude oil exports in April to below 7 million barrels per day (bpd), while keeping its output well below 10 million bpd, a Saudi official said on Monday, as the Kingdom seeks to drain a supply glut and support oil prices.
State-owned Saudi Aramco’s oil allocations for April are 635,000 bpd below customers’ nominations, which are the requests made by refiners and clients for Saudi crude, the official said.
“Despite very strong demand from international waterborne customers at more than 7.6 million bpd, customers were allocated less than 7 million bpd,” the official said, adding that Saudi exports in March would also be below 7 million bpd.
Oil prices have been supported this year by output cuts by the Organization of the Petroleum Exporting Countries and its allies. US sanctions on the oil industries of OPEC members Iran and Venezuela have also tightened supplies.
Benchmark Brent climbed above $66 a barrel on Monday, helped by comments by Saudi Oil Minister Khalid Al-Falih that an end to OPEC-led supply cuts was unlikely before June and a report showed a fall in US drilling activity.
April allocations by Aramco show “a deep cut of 635,000 bpd from customer requests for its crude oil,” the Saudi official said.
“This will keep production well below 10 million bpd in April,” the official said, adding that this was also below the 10.311 million bpd that the Kingdom had agreed as its production target under the OPEC-led deal on cutting supplies.
OPEC, Russia and other producers, known as OPEC+, agreed in December to reduce supply by 1.2 million bpd from Jan. 1 for six months.
“Saudi Arabia is demonstrating extraordinary commitment to accelerating market rebalancing,” the official said, adding that the Kingdom expected other OPEC+ countries to show similar levels of contributions and high conformity to agreed cuts.
The Saudi energy minister said on Sunday that March oil output was 9.8 million bpd and the country — OPEC’s biggest producer — planned to keep its April output at the same level.
Saudi Arabia’s oil production in February fell to 10.136 million bpd, a Saudi industry source said on Friday, down from 10.24 million bpd in January.
Saudi crude exports to the US market have slowed in past weeks, according to the International Energy Agency, while Asia’s crude demand is set to drop in the second quarter due to seasonal refinery maintenance which would limit supply.


Oil up after drone attack on Saudi field, but OPEC report caps gains

Updated 10 min 22 sec ago

Oil up after drone attack on Saudi field, but OPEC report caps gains

LONDON: Crude oil prices rose on Monday following a weekend attack on a Saudi oil facility by Yemen’s Houthi militia and as traders looked for signs of progress in US-China trade negotiations.
Price gains were, however, capped to some degree by an unusually downbeat OPEC report that stoked concerns about growth in oil demand.
Brent crude, the international benchmark for oil prices, was up 85 cents, or about 1.4%, at $59.49 a barrel at 1225 GMT.
US West Texas Intermediate (WTI) crude futures were up $1.01, or 1.8%, at $55.88 a barrel.
A drone attack by the Iran-backed Houthi militia on an oilfield in eastern Saudi Arabia on Saturday caused a fire at a gas plant, adding to Middle East tensions, but state-run Saudi Aramco said oil production was not affected.
“The oil market seems to be pricing in again a geopolitical risk premium following the weekend drone attacks on Saudi Arabia, but the premium might not sustain if it does not result in any supply disruptions,” said Giovanni Staunovo, oil analyst for UBS.
Iran-related tensions appeared to ease after Gibraltar released an Iranian tanker it seized in July, though Tehran warned the United States against any new attempt to seize the tanker in open seas.
Concerns about a recession also limited crude price gains.
Meanwhile, China’s announcement of key interest rate reforms over the weekend has fueled expectations of an imminent reduction in corporate borrowing costs in the struggling economy, boosting share prices on Monday.
US energy firms this week increased the number of oil rigs operating for the first time in seven weeks despite plans by most producers to cut spending on new drilling this year.
“WTI in recent weeks has performed relatively better than Brent... Pipeline start ups in the United States have been supportive for WTI, while the ongoing trade war has had more of an impact on Brent,” said Warren Patterson, head of commodities strategy at Dutch bank ING.
The Organization of the Petroleum Exporting Countries (OPEC) cut its forecast for global oil demand growth in 2019 by 40,000 barrels per day (bpd) to 1.10 million bpd and indicated the market would be in slight surplus in 2020.
It is rare for OPEC to give a bearish forward view on the market outlook.
“Such a bearish prognosis will heap more pressure on OPEC to take further measures to support the market,” said Stephen Brennock of oil broker PVM.