After flooding the US market in recent months, Saudi Arabia plans to slash exports to the world’s largest oil market in the coming weeks in an effort to dampen visible build-ups in crude inventories.
American-based oil refiners have been told to expect much lower shipments from the kingdom in January than in recent months following the Opec agreement to reduce production, according to people briefed on the plans of state oil company Saudi Armco.
Saudi crude shipments to the US next month could even test the 30-year low set in late 2017 of 582,000 bpd, down about 40% from the most recent three-month average, the same people said, asking not to be named as the information isn’t public. The final figure could still change, they added.
By shifting the focus of Saudi export reductions toward the US, Riyadh hopes to show to the market it’s making good on its promise to cut supplies. Fluctuations in US crude imports and stockpiles have an outsize impact on the market because data are available on a weekly basis. In other regions, oil traders only get official figures on a monthly basis, or not at all in the case of stockpiles in big consumers such as China and India. The Saudi energy ministry didn’t respond to a request for comment. Read more
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