Saudi Arabia is set to keep its crude oil exports in August at the levels from July, although the OPEC+ group is expected to ease the record production cuts as of next month, sources in the industry told Reuters on Monday.
The record 9.7-million-bpd OPEC+ cuts – which were extended once for a month until the end of July – are now set to ease to a total cut of 7.7 million bpd as of August 1.
Currently, there are no indications that the coalition of oil producers would be willing to even discuss another extension of the record level of production cuts.
At the beginning of this month, Russia’s Energy Minister Alexander Novak said that OPEC+ was not discussing or planning changes to its production cut agreement, which should see the oil producers ease the cuts in August.
Despite the eased cuts, OPEC’s top producer and the world’s biggest oil exporter, Saudi Arabia, does not intend to boost its crude oil exports, according to Reuters’ sources.
The increased production will go to domestic power generation, for which Saudi Arabia burns more oil during the summer months, the sources told Reuters.
In June, Saudi Arabia’s observed crude oil exports dropped to 5.7 million bpd, down from 6.2 million bpd in May, according to tanker-tracking data compiled by Bloomberg. This was the lowest level of Saudi crude oil exports since Bloomberg began tracking the flows in 2017.
The Kingdom is also reportedly trying to tighten the medium and heavy crude market in Asia. Saudi Aramco has focused on cutting supply for its Arab Medium and Arab Heavy grades, with at least six buyers in Asia notified they would receive lower volumes of heavier grades with the option to substitute the missing heavy barrels with lighter grades, sources with knowledge of the plans told Reuters on Monday.
While the Saudi oil giant is said to be keeping exports flat in August, the Abu Dhabi National Oil Company (ADNOC) is reportedly planning to boost its exports next month by 300,000 bpd, sources familiar with the matter told Reuters last week.
By Charles Kennedy for Oilprice.com
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