Saudi Arabia to cut oil exports in April

Saudi Arabia plans to cut its crude oil exports in April to below 7 million barrels per day (bpd), while keeping its output well below 10 million bpd, a Saudi official said on Monday, as the kingdom seeks to drain a supply glut and support oil prices.

State-owned Saudi Aramco’s oil allocations for April are 635,000 bpd below customers’ nominations, which are the requests made by refiners and clients for Saudi crude, the official said.

“Despite very strong demand from international waterborne customers at more than 7.6 million bpd, customers were allocated less than 7 million bpd,” the official said, adding that Saudi exports in March would also be below 7 million bpd.

Oil prices have been supported this year by output cuts by the Organization of the Petroleum Exporting Countries and its allies. U.S. sanctions on the oil industries of OPEC members Iran and Venezuela have also tightened supplies.

Benchmark Brent climbed above $66 a barrel on Monday, helped by comments by Saudi oil minister Khalid al-Falih that an end to OPEC-led supply cuts was unlikely before June and a report showed a fall U.S. drilling activity.

April allocations by Aramco show “a deep cut of 635,000 bpd from customer requests for its crude oil,” the Saudi official said.

“This will keep production well below 10 million bpd in April,” the official said, adding that this was also below the 10.311 million bpd that the kingdom had agreed as its production target under the OPEC-led deal on cutting supplies.

OPEC, Russia and other producers, known as OPEC+, agreed in December to reduce supply by 1.2 million bpd from Jan. 1 for six months.

“Saudi Arabia is demonstrating extraordinary commitment to accelerating market rebalancing,” the official said, adding that the kingdom expected other OPEC+ countries to show similar levels of contributions and high conformity to agreed cuts.

The Saudi energy minister said on Sunday that March oil output was 9.8 million bpd and the country, OPEC’s biggest producer, planned to keep its April output at the same level.

Saudi Arabia’s oil production in February fell to 10.136 million bpd, a Saudi industry source told Reuters on Friday, down from 10.24 million bpd in January.

Saudi crude exports to the U.S. market have slowed in past weeks, according to the International Energy Agency, while Asia’s crude demand is set to drop in the second quarter due to seasonal refinery maintenance which would limit supply.

Saudi Aramco plans to shut its Yanbu oil refinery for planned maintenance for one month from early March.