After flooding the US market with oil in recent months, Saudi Arabia reportedly plans to downgrade exports of crude oil.
US-based oil refiners were told to expect a much lower shipment from Saudi Arabia in January than in recent months, following the OPEC agreement to reduce production, sources briefed on the plans of state oil company Saudi Aramco told Bloomberg.
The shipments apparently could hit a 30-year low set in late 2017 of 582,000 barrels a day, which is 40% less than the recent three-month average, sources added on condition of anonymity, as the information they are providing has not been made public. They noted, however, that the final figure could still change.
According to sources, Riyadh hopes to show the market it is making good on its promise to cut supplies following the OPEC decision. The shift in crude exports to the US could potentially have a huge impact on the market because data are available on a weekly basis, while in other regions oil traders only receive official figures on a monthly basis, or not at all.
The Saudi energy ministry did not provide any official comment.
The decision to cut supplies would demonstrate that Saudi Arabia is sincere with its promise to bring supply and demand in line, yet it might also lead to a conflict of interests with US President Donald Trump, who repeatedly posted on Twitter his demand that OPEC maintain its current levels of supply.
Total Saudi oil exports are expected to drop by 1 million barrels a day in January, down from about 8 million barrels a day in November-December, sources said. Khalid Al-Falih, the Saudi energy minister, told reporters last week that Saudi production will eventually drop in January to 10.2 million barrels a day, down from 11.1 million barrels a day in November.
The export cuts, if they are to be implemented, will affect big US refiners such as Valero Energy Corp., Phillips 66, Chevron Corp., Exxon Mobil Corp., and Marathon Petroleum Corp., forcing them to find other exporters in Mexico, Canada or Venezuela. Saudi’s supply to the US has been 860,000 barrels of crude a day on average so far this year, according to Bloomberg calculations based on weekly customs data, hitting its highest average of 975,000 barrels a day in July-December.
Sourse: sputniknews.com
