OPEC oil output hits two-year low

Updated 11 December 2013

OPEC oil output hits two-year low

LONDON: OPEC’s oil output has fallen below 30 million barrels per day for the first time in two years in October, a Reuters survey found, as near-record Saudi Arabian output fails to offset disruption in Libya and lower supply from Iran and Nigeria.
Supply from the Organization of the Petroleum Exporting Countries has averaged 29.90 million barrels per day (bpd), down from a revised 30.01 million bpd in September, according to the survey based on shipping data and information from sources at oil companies, OPEC and consultants.
The survey further illustrates the drag on OPEC output from problems in African producers and sanctions on Iran. But rising shale oil supply from the US has limited the outages’ impact on prices, which at $109 a barrel are down over $8 from their 2013 peak.
“The Atlantic Basin continues to be driven by the increase in US production. If we did not have the increased supplies from the US, the lower OPEC production would have had a greater impact,” said Olivier Jakob, an analyst at Petromatrix.
In October, renewed protests in Libya, plus disruption in Nigeria and a drop in Iranian sales outweighed a partial recovery in southern Iraqi exports and a third month of Saudi output at around 10 million bpd.
OPEC’s October output is the lowest since October 2011, when the group pumped 29.81 million bpd according to Reuters surveys, and leaves supply below OPEC’s nominal target of 30 million bpd for the first time since it came into effect in January 2012.
The biggest fall in supply was in Libya, where protests at oilfields and terminals again limited supplies. Output averaged 410,000 bpd during October and by the end of the month was below 300,000 bpd, according to the survey.
Libya is a long way away from bringing output back to 1.4 million bpd, the production rate earlier this year.
Iranian supply to market was estimated at 2.61 million bpd, down 90,000 bpd as less crude headed to China and India. US and European sanctions on Iran continue to restrain exports, despite a thaw in relations with the West from Iran’s apparent willingness to compromise on its nuclear work.
In Nigeria, where output has been increasingly hit by spills and theft from pipelines, supply declined as Royal Dutch Shell RDSa.L again had to close the Trans Niger pipeline and warn it might miss shipments of Bonny Light crude.
Saudi Arabia, industry sources say, has kept output around 10 million bpd for the last three months. Supply edged lower in October due to a reduced requirement for crude to fuel domestic power plants, the survey found.
The Kingdom lifted output to 10.05 million bpd in August, the highest since records began in 1980, according to figures from the US Energy Information Administration.
Iraq boosted oil exports in October due to a reduced impact from infrastructure work at its southern terminals. Exports from the south averaged 1.96 million bpd in October, according to shipping data, up from September’s 1.82 million bpd.
But lower shipments of Kirkuk crude — due to bomb attacks on the pipeline to Turkey and a dispute with the Kurdistan Regional Government — limited the rise in exports overall.

Saudi Arabia looks to cut spending in bid to shrink deficit

Updated 01 October 2020

Saudi Arabia looks to cut spending in bid to shrink deficit

  • Saudi Arabia has issued about SR84 billion in sukuk in the year to date

LONDON: Saudi Arabia plans to reduce spending next year by about 7.5 percent to SR990 billion ($263.9 billion) as it seeks to reduce its deficit. This compares to spending of SR1.07 trillion this year, it said in a preliminary budget statement.

The Kingdom anticipates a budget deficit of about 12 percent this year falling to 5.1 percent next year.

Saudi Arabia released data on Wednesday showing that the economy contracted by about 7 percent in the second quarter as regional economies faced the twin blow of the coronavirus pandemic and continued oil price weakness.

The unemployment rate among Saudis increased to 15.4 percent in the second quarter compared with 11.8 percent in the first quarter of the year.

The challenging headwinds facing regional economies is expected to spur activity across debt markets as countries sell bonds to help fund spending.

Saudi Arabia has already issued about SR84 billion in sukuk in the year to date.

“Over the past three years, the government has developed (from scratch) a well-functioning and increasingly deeper domestic sukuk market that has allowed it to tap into growing domestic and international demand for Shariah-compliant fixed income assets,” Moody’s said in a statement on Wednesday. 

“This, in turn, has helped diversify its funding sources compared with what was available during the oil price shock of 2015-16 and ease liquidity pressures amid a more than doubling of government financing needs this year,” the ratings agency added.