Saudi Arabia oil exports to hit 10.6m barrels

Saudi Arabia oil exports to hit 10.6m barrels
In this file photo taken on September 20, 2019 a general view of Saudi Aramco's Abqaiq oil processing plant is seen on September 20, 2019. (AFP)
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Updated 31 March 2020

Saudi Arabia oil exports to hit 10.6m barrels

Saudi Arabia oil exports to hit 10.6m barrels
  • The Kingdom intends to increase its crude oil exports starting in May, by about 600,000 barrels per day

DUBAI: Saudi Arabia is to boost exports of crude oil to a record high in a new show of strength on international energy markets.

From May, the Kingdom will export about 600,000 more barrels of oil per day on top of the current level of 10 million barrels, even as demand and crude prices have been falling.

The extra exports have been made possible by switching to gas for domestic energy generation, and by lower domestic demand caused by the coronavirus pandemic, an energy ministry official said.

Global demand for crude is down as much as 20 percent by some estimates because of stalled economic activity. Oil prices on International markets were volatile again yesterday. Brent, the Middle East benchmark, dipped sharply before closing up by about 5 percent at just over $26 per barrel. West Texas Intermediate, the US standard, fell below the significant $20 per barrel level. It recovered slightly, but still closed about 8 percent down.

US and Russian presidents Donald Trump and Vladimir Putin discussed both oil prices and the coronavirus pandemic in a telephone conversation on Monday.

Trump said he was concerned about the effect of falling prices on the US oil industry, which has higher costs than either Saudi Arabia or Russia. “We don’t want to have a dead industry,” he said. “I never thought I’d be saying that maybe we have to have an oil price increase, but we do.”

However, experts said the new Saudi export levels were a sign that there would be no early truce in the “oil price wars” following the end of the Saudi-Russia alliance to limit output. On top of already announced discounts, the export increase “will translate into a very low price for Saudi crude,” Olivier Jakob, director of Swiss-based energy consultancy Petromatrix, told Arab News.

Others said the Kingdom’s strategy of taking market share at the expense of high cost producers, especially in the US, was beginning to pay off. The strategy was a “game theory masterstroke” that would re-assert Saudi dominance of global energy markets, said Antoine Halff of the Columbia University Center on Global Energy Policy.


OPEC+ compromises on oil supply increase

Updated 12 min 38 sec ago

OPEC+ compromises on oil supply increase

OPEC+ compromises on oil supply increase
  • Members acknowledge the ‘extraordinary efforts’ of Saudi energy minister

DUBAI: The world’s biggest oil producers have reached a compromise agreement on the supply of crude oil for next year, in an attempt to ensure an ongoing recovery in markets that remain fragile as a result of the COVID-19 pandemic.
After a week of online deliberations, OPEC+, the alliance of producers led by Saudi Arabia and Russia, agreed to increase output from January by only 500,000 barrels per day — significantly less than the 2 million barrels originally planned.
The new levels will be subject to monthly monitoring by OPEC+ ministers, chaired by Saudi Minister of Energy Prince Abdul Aziz bin Salman, and could be increased or reduced according to market conditions.
Details of the compromise deal were agreed upon after long discussions among 23 producers, organized from the Vienna home of the Organization of Petroleum Exporting Countries.
The participants acknowledged the “perseverance, diligence and extraordinary efforts” of Prince Abdul Aziz in helping to combat the effects of the pandemic on global energy markets.
Some exporters had argued that the fragile demand for crude meant the full 2 million-barrel increase — as scheduled in the historic agreement last April that is credited with dragging oil prices back from decade-long lows — should be delayed for a further three months.
Others — most notably the UAE — took a more positive view of demand in the months ahead.
The compromise arrangement was hammered out against a background of rising oil prices after news of effective vaccines lifted economic prospects. Brent crude stood at close to $49 as the OPEC+ meeting closed.
Energy experts welcomed the deal. Robin Mills, chief executive of consultancy Qamar Energy, told Arab News: “The plan to make modest monthly increases makes sense. It does not overwhelm the market, gradually regains some market shares, and can be adjusted according to progress on vaccines.”