Saudi Arabia to restrain oil exports in March, confident cuts will stabilize market

Saudi Energy Minister Khalid Al-Falih and Russian Energy Minister Alexander Novak attend a news conference at the Ritz-Carlton hotel in Riyadh, Saudi Arabia. (Reuters)
Updated 14 February 2018

Saudi Arabia to restrain oil exports in March, confident cuts will stabilize market

LONDON: Saudi Arabia will restrain its oil exports in March despite lower domestic need for crude as the Kingdom pushes to eliminate fully the global oil glut and combat worries about a new cycle of oil price weakness.
Saudi Arabia will keep its crude exports below 7 million barrels per day (bpd) in March, despite a maintenance shutdown of the 400,000 bpd SAMREF refinery, the Saudi energy ministry said, confirming a plan given earlier by industry sources.
“Saudi Arabia remains focused on working down excess oil inventories,” a ministry spokesman said in a statement.
“Market volatility is a common concern for producers and consumers, and the Kingdom is committed to mitigating this volatility and moderating its negative impacts by responsibly meeting its pledges” under an OPEC-led supply cut deal.
OPEC and outside producers including Russia are reducing output to get rid of a supply glut. The pact began a year ago and has been extended until the end of 2018.
The cut has boosted oil prices, which in January topped $71 a barrel for the first time since 2014. But crude has since slid and hit a 2018 low of $61.76 this week, pressured by rising US output and forecasts oversupply may persist.
Saudi Arabia’s Energy Minister Khalid Al-Falih sounded an upbeat note even after the price drop, saying on Wednesday he was sure cooperation between OPEC and its non-OPEC allies will continue to stabilize the market.
“I am confident that our high degree of cooperation and coordination will continue and bring the desired results,” Falih told an industry conference attended by Russian Energy Minister Alexander Novak and OPEC Secretary General Mohammad Barkindo.
“Market volatility is unfortunate but ultimately it is the fundamentals that I watch.”
Barkindo said oil demand would grow this year at healthy levels and data pointed to continued high compliance by producers in January with their pledges under the supply-cut deal.
OPEC has delivered more than 100 percent of the output cuts that members pledged under the deal, according to figures from OPEC and other analysts, helped in part by an involuntary drop in Venezuela, where output is falling amid an economic crisis.
The Saudi energy ministry also said production by state oil company Aramco in March will be 100,000 bpd below February’s level, suggesting Saudi Arabia will continue to pump less than its OPEC target.
Novak met with Saudi King Salman at his palace in Riyadh on Wednesday and the two discussed producers’ efforts to rebalance the market and decrease surplus inventories, SPA reported.
Novak had said on Tuesday oil inventories had been declining despite the rise in US production.  


Oil prices surge after attacks hit Saudi output

Updated 16 September 2019

Oil prices surge after attacks hit Saudi output

  • The Houthi attacks hit two Aramco sites and effectively shut down six percent of the global oil supply
  • President Donald Trump said Sunday the US was ‘locked and loaded’ to respond to the attacks

HONG KONG: Oil prices saw a record surge Monday after attacks on two Saudi facilities slashed output in the world’s top producer by half, fueling fresh geopolitical fears as Donald Trump blamed Iran and raised the possibility of a military strike on the country.
Brent futures surged $12 in the first few minutes of business — the most in dollar terms since they were launched in 1988 and representing a jump of nearly 20 percent — while WTI jumped more than $8, or 15 percent.
Both contracts pared the gains but were both still more than 10 percent up.
The attack by Tehran-backed Houthi militia in neighboring Yemen, where a Saudi-led coalition is bogged down in a five-year war, hit two sites owned by state-run giant Aramco and effectively shut down six percent of the global oil supply.
Trump said Sunday the US was “locked and loaded” to respond to the attack, while Secretary of State Mike Pompeo said: “The United States will work with our partners and allies to ensure that energy markets remain well supplied and Iran is held accountable for its aggression.”
Tehran denies the accusations but the news revived fears of a conflict in the tinderbox Middle East after a series of attacks on oil tankers earlier this year that were also blamed on Iran.
“Tensions in the Middle East are rising quickly, meaning this story will continue to reverberate this week even after the knee-jerk panic in oil markets this morning,” said Jeffrey Halley, senior market analyst at OANDA.
Trump authorized the release of US supplies from its Strategic Petroleum Reserve, while Aramco said more than half of the five million barrels of production lost will be restored by tomorrow.
But the strikes raise concerns about the security of supplies from the world’s biggest producer.
Oil prices had dropped last week after news that Trump had fired his anti-Iran hawkish national security adviser John Bolton, which was seen as paving the way for an easing of tensions in the region.
“One thing we can say with confidence is that if part of the reason for last week’s fall in oil and improvement in geopolitical risk sentiment was the news of John Bolton’s sacking ... and thoughts this was a precursor to some form of rapprochement between Trump and Iran, then it is no longer valid,” said Ray Attrill at National Australia Bank.