Oil prices rise as Saudis curb exports and OPEC cuts to continue till June 2019

Despite higher requests from customers, Saudi Arabia will be keeping its April crude oil exports at below 7 million bpd, a Saudi official told Reuters, signaling that OPEC’s biggest producer is set to do ‘whatever it takes’ to rebalance the market and support oil prices.

Saudi Aramco will be keeping its crude oil exports this month and next at below 7 million bpd, the Saudi official said, noting that despite requests for more than 7.6 million bpd of Saudi oil for April, the state oil giant will ship below 7 million bpd to clients next month—“a deep cut of 635,000 bpd from customer requests for its crude oil.”

The lower allocations by Saudi Aramco will also mean that the Kingdom’s oil production will be “well below 10 million bpd” in April, the official told Reuters.

Under the OPEC/non-OPEC deal for a total of 1.2 million bpd cuts between January and June, Saudi Arabia’s share is a cut of 322,000 bpd from the October level of 10.633 million, to reduce output to 10.311 million bpd.

Saudi Arabia pumped 10.1 million bpd of crude in February, a Saudi official told S&P Global Platts on Friday, in yet another sign that OPEC’s largest producer and de facto leader is cutting much deeper than it had pledged under the OPEC+ production deal.

Meanwhile, OPEC will continue producing less crude oil than it could until at least June as April, when OPEC+ meets, would be too early to end the cuts, Saudi Arabia’s Energy Minister Khalid al-Falih said after a meeting with his Indian counterpart, as quoted by Reuters.

According to the Saudi official, demand for crude will remain healthy this year, driven mainly by the United States and China. However, the former is becoming increasingly self-sufficient in oil, which might interfere with expectations for strong demand from that particular direction.

India’s Oil Minister has urged the Saudis to make sure there is ample crude oil supply for the coming months, noting at the same time prices were rising higher than New Delhi would like to see them.

Shekhar Ghosh is consulting editor, Indoasiancommodities.com. He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at shekhar.ghosh@indoasiancommodities.in.

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