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OPEC’s de facto leader and the world’s biggest crude oil exporter. Saudi Arabia. will be reducing exports to some of its buyers in Asia next month. and will significantly cut crude exports to the U.S.. Reuters reported on Monday. quoting industry sources.
Cuts in exports to Asia in July would be a bit steeper than the volumes cut in June. according to Reuters’ sources.
Saudi Arabia is reducing its oil exports to Asia by around 7 million barrels this month. with Saudi Aramco set to cut its crude supplies to China. South Korea. and South East Asia by 1 million barrels each. In addition. Saudi exports to Indian buyers in June were set to decline by just over 3 million barrels. and supplies to Japan – to drop by just below 1 million barrels.
For July. at least five Asian buyers–mostly in North Asia–would get full contracted volumes. while some customers in India. China. and South Korea would see lower volumes of supplies. according to Reuters’ sources.
Saudi Aramco is set to cut July exports to India by nearly 200.000 bpd. and to China by around 110.000 bpd. while buyers in Japan and Taiwan will get their full volumes. one source with knowledge of allocations told Reuters. One of the main Chinese buyers has asked for lower volumes next month. due to refinery maintenance and the more expensive Dubai crude benchmark.
Outside Asia. the Saudis will cut exports to the U.S. by around 35 percent next month. one source told Reuters.
Just a day after OPEC extended the output cuts into March 2018. Saudi Oil Minister Khalid Al-Falih said that the Kingdom planned to purposely reduce exports to America to force a reduction in the sizeable U.S. inventories. which are preventing a greater rise in global oil prices.
Elsewhere. Saudi Arabia is keeping its crude exports to Europe steady in July over June.
While the Saudis have over-complied with OPEC’s production cuts since the beginning of the deal in January. they have not drastically cut exports to the Asian market. where the battle for market share is going on. cuts or no cuts.
Now summer is coming. and Saudi Arabia. which typically burns around 700.000 bpd of oil for power generation between May and August. could further reduce exports.
This summer. however. Saudi Arabia wants to use more natural gas in power plants to cut the use of oil. which could lead to reducing oil consumption for power generation by around 200.000 bpd. industry sources told Reuters last month.
