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.


Japan’s households tighten purse strings as sales tax and typhoon hit

Updated 06 December 2019

Japan’s households tighten purse strings as sales tax and typhoon hit

  • Falls in factory output, jobs and retail add to fears of worsening slowdown after Tokyo unveils $122bn stimulus package

TOKYO: Japanese households cut their spending for the first time in almost a year in October as a sales tax hike prompted consumers to rein in expenses and natural disasters disrupted business.

Household spending dropped 5.1 percent in October from a year earlier, government data showed on Friday.

It is the first fall in household spending in 11 months and the biggest fall since March 2016 when spending fell by 5.3 percent. It was also weaker than the median forecast for a 3 percent decline.

That marked a sharp reversal from the 9.5 percent jump in September, the fastest growth on record as consumers rushed to buy goods before the Oct. 1 sales tax hike from 8 percent to 10 percent.

“Not only is the sales tax hike hurting consumer spending but impacts from the typhoon also accelerated the decline in the spending,” said Taro Saito, executive research fellow at NLI Research Institute.

“We expect the economy overall and consumer spending will contract in the current quarter and then moderately pick up January-March, but such recovery won't be strong enough.”

Household spending fell by 4.6 percent in April 2014 when Japan last raised the sales tax to 8 percent from 5 percent. It took more than a year for the sector to return to growth.

Compared with the previous month, household spending fell 11.5 percent in October, the fastest drop since April 2014, a faster decline than the median 9.8 percent forecast.

Analysts said a powerful typhoon in October, which lashed swathes of Japan with heavy rain, also played a factor in the downbeat data. Some shops and restaurants closed during the storm and consumers stayed home.

Separate data also showed the weak state of the economy.

The index of coincident economic indicators, which consists of a range of data including factory output, employment and retail sales data, fell a preliminary 5.6 points to 94.8 in October from the previous month, the lowest reading since February 2013, the Cabinet Office said on Friday.

It was also the fastest pace of decline since March 2011, according to the data.

Real wages adjusted for inflation, meanwhile, edged up for a second straight month in October, but the higher levy and weak global economy raise worries about the prospect for consumer spending and the overall economy.

While the government has sought to offset the hit to consumers through vouchers and tax breaks, there are fears the higher tax could hurt an economy already feeling the pinch from global pressures.

Japan unveiled a $122 billion fiscal package on Thursday to support stalling growth and as policymakers look to sustain activity beyond the 2020 Tokyo Olympics.

A recent spate of weak data, such as exports and factory output, have raised worries about the risk of a sharper-than-expected slowdown. The economy grew by an annualized 0.2 percent in the third quarter, the weakest pace in a year.

Analysts expect the economy to shrink in the current quarter due to the sales tax hike.