Saudi Arabia will cut crude oil exports in August by more than 600,000 barrels per day to meet growing domestic demands while staying within its OPEC production commitment.
“There is strong demand for our crude but we are sticking to our OPEC commitments,” a Saudi industry source said today.
“In order to meet its OPEC quota and meet its domestic demand during summer, Saudi Arabia has made big cuts in allocations internationally by more than 600,000 bpd for the month of August,” the source added.
The source confirmed that crude exports for August will fall to their lowest level this year at around 6.6 million bpd.
The reduction will impact the allocations of crude oil to Europe, Asia, US and other major export destinations.
OPEC agreed to cut oil production at the end of last year to prop up oil prices. The deal was extended into 2018 fearing a collapse in oil price if production was not pulled back.
With the planned initial public offering (IPO) of Aramco, expected in 2018, which experts believes requires oil to be at $60 dollars a barrel, oil prices are being watched nervously.
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“Saudi Arabia is keen to see an improvement in the oil market and accelerate the balancing process, and expects other producers to do the same,” the Saudi source said, adding that there are signs of improvement in market fundamentals.
A joint ministerial committee from OPEC and non-OPEC countries including Saudi Arabia and Russia, the world’s biggest oil producers, will meet on 24 July to discuss compliance with a supply-cut pact and review the rise in output from Nigeria and Libya. Both countries were exempt from the production cuts, reported Reuters.