Saudi Arabia has cut crude oil allocations for November by 560,000 barrels per day (bpd), an oil ministry spokesman said on Monday, in line with the kingdom’s commitment to an OPEC-led supply reduction pact.
Despite the cut in allocations, from customers’ requests for Saudi crude, the top oil exporter plans to ship slightly above 7 million bpd next month, up from low levels during summer when domestic demand was at its peak.
“Despite very strong demand from international waterborne customers at more than 7.711 million bpd, they were allocated only 7.150 million bpd,” the spokesman said in a statement.
The kingdom curtailed its oil exports in September to below 6.7 million bpd, “despite high customer demand and the partial reduction of domestic summer crude burning requirements”, the spokesman said.
Saudi Arabia capped its exports at 6.6 million bpd in August. October export figures are not yet available but state oil giant Aramco cut allocations to its customers worldwide this month by 350,000 bpd, a lower reduction than the month before.
Seasonal drops in domestic crude demand free up more oil for export during the winter months.
The kingdom is “restraining not only the top-line of production volume but even more importantly the bottom line of exports, which are what ultimately shape global inventories and market balances,” the ministry spokesman said.
OPEC along with Russia and other non-member oil producers agreed to cut output by around 1.8 million bpd from Jan. 1 this year until March 2018.
OPEC meets next in Vienna on Nov. 30 to decide on its output policy and OPEC officials have said the supply-cutting pact is likely to be extended beyond March.
Saudi Arabia has been reducing shipments in recent months, particularly to the United States, as it turns its focus on cutting exports in an attempt to drain global oil stocks.
Bringing global oil inventories down to their five-year average is a key marker for the Organization of the Petroleum Exporting Countries in measuring the success of the supply reduction.
“The kingdom expects all other participants in the (agreement) to follow suit and to maintain the high levels of overall conformity achieved in August going forward,” the spokesman said.
OPEC and other producing countries delivered 116 percent of their pledged output cuts in August. Read more