Saudi Arabia plans to keep its crude oil exports below 7 million barrels per day in August and September despite strong demand from customers, to help drain global oil inventories and bring the market back to balance, a Saudi oil official said.
State-owned Aramco’s oil nominations – the requests made by refiners and customers for Saudi crude – were high in September, a sign of healthy oil demand globally, the Saudi official, who asked not to be named, said on Thursday.
Despite that, the kingdom is maintaining its oil production below 10 million bpd and keeping its exports below 7 million bpd in both August and September, he said.
“Demand was universally stronger, in all regions. But we kept exports below 7 million bpd,” the official said.
“If we satisfy September demand we will produce about 10.3 million bpd because demand is much higher, but we decided to keep production and exports flat and cut customer requests by 700,000 bpd.”
Saudi Arabia’s production target under an output-cutting deal among the Organization of the Petroleum Exporting Countries and allies – a grouping known as OPEC+ – is 10.3 million bpd.
In July, OPEC and allies led by Russia agreed to extend oil output cuts until March 2020 to prop up the price of crude as the global economy weakens and U.S. production soars.
“Saudi Arabia is committed to do whatever it takes to keep the market balanced next year,” the official said. “We believe, based on close communication with key OPEC+ countries, that they will do the same.”
“The (oil market) fundamentals are good, especially on the supply side, due to a combination of strong OPEC+ over-compliance, and a lower than previously expected U.S. outlook,” the official said.
Brent crude was trading at $56.91, up 68 cents or 1.2 per cent, at 1141 GMT on Thursday.
The EIA on Tuesday lowered its domestic oil growth forecasts for the year after Hurricane Barry disrupted Gulf of Mexico output in July. Production is set to rise by 1.28 million bpd to 12.27 million bpd this year, slightly lower than previous growth forecast of 1.40 million bpd.