Saudi Aramco to Make Largest Export Reduction in its History

Saudi Arabia has decided to show all partners on the Vienna OPEC+ an example of how to reduce oil exports. The Saudi Energy Ministry announced that in November, Saudi Aramco will produce "the largest scale cuts in deliveries to customers in its history".

State corporation is expected to reduce export flows by 560 thousand barrels, with Saudi Aramco to supply 7.15 million barrels per day to customers, while demand, according to its data, exceeds 7.7 million barrels per day.

"The Kingdom expects that all other participants in the Vienna OPEC+ deal will follow suit and will continue to maintain the high overall compliance indicators reached in August," the Saudi Energy Ministry stated.

Saudi Aramco is reducing oil exports for the fourth consecutive month. In October, foreign shipments fell by 350 thousand barrels per day. "Despite the fact that the demand for oil at the refinery is growing, a decision was made to reduce it".

Demand for oil and refining margins in Asia is high, but the state-owned oil company Saudi Aramco will reduce supplies to the region, with most of the cuts going to Japan. The agency also claims that, according to its data, Europe will also be exported 70,000 barrels of oil a day less.

In summer, Saudi Aramco cut its exports to suppliers in the US. In July, oil shipments to US ports fell to an absolute minimum for the past 30 years. In June, Saudi Arabia exported about 1 million barrels per day to the United States, in July - only 800 thousand, and in August, deliveries "dried up" by another 100 thousand barrels a day.

There can be two reasons for this happening. First, Riyadh is aiming to achieve a reduction in record commercial oil reserves in the US, which for a long time exceeded the level of 500 million barrels. Second, everything can be explained by the rise in the price of Saudi oil, which American customers are now reluctant to buy. The cost of Arab Light and Arab Medium brands increased by $ 0.5 per barrel, Arab Heavy - by 30 cents per barrel, Arab Extra Light - by 10 cents.

Saudi Aramco, officially the Saudi Arabian Oil Company, most popularly known just as Aramco, is a Saudi Arabian national petroleum and natural gas company based in Dhahran.

Dimitri Dolaberidze

19 October 2017 19:10