Saudi Arabia, the world’s top crude exporter, will keep supplies at full contracted volumes for Asian term buyers in January, industry sources said on Tuesday, the latest sign the kingdom is holding firm against falling prices caused by oversupply.
Coming less than a week after Saudi Arabia slashed January prices to Asia and within two weeks of blocking an OPEC output cut, the kingdom is maintaining pressure on non-OPEC producers to cut production.
Oil fell to a five-year low on Monday and is down more than 40 per cent since June as a weakening global economy saps demand for crude amid surging output from U.S. shale formations.
“There was no change in supplies … It was as expected,” an industry source said, who added that he has not seen any sign that Middle East producers are planning cuts in contracted volumes.
Another industry source said Saudi Arabia had notified his company of its intention to hold contracted volumes steady from December.
Saudi Arabia blocked calls last month from poorer members of the OPEC oil exporter group for production cuts to arrest a slide in global prices, sending benchmark crude plunging to multiple year lows.
The OPEC producer has supplied full contractual volumes to most Asian buyers since late 2009.
“The new reality is that OPEC on its own will no longer be able to rebalance oversupplied oil markets,” Macquarie said in a research note on Monday.
“Although production growth should slow in key non-OPEC regions, including the U.S., Russia, the North Sea and Latin America, the timing is less clear.”