Saudi Arabia’s crude oil exports surged by 413,000 barrels per day (bpd) in August, to the highest level in six months, as the world’s top crude exporter and the OPEC+ group accelerated the reversal of the production cuts.
Saudi Arabia’s crude oil production also soared in August, by 521,000 bpd from July, the latest data by the Joint Organizations Data Initiative (JODI) showed on Wednesday.
Refinery runs in Saudi Arabia fell by 76,000 bpd month-on-month in August, freeing even more barrels for exports.
To meet peak demand in key markets such as China, Saudi Arabia’s crude shipments were expected to reach a two-year high in August.
Appetite for Middle Eastern crude jumped among Asian buyers this summer following the Israeli-Iran conflict in June, which pushed spot price premiums higher, making buyers bet more heavily on term deliveries from Middle Eastern producers, whose official selling prices became more attractive than spot market ones.
Saudi crude exports may have been even higher in September, as the members of the OPEC+ group boosted their production last month by 630,000 bpd from August as the alliance completed the unwinding of 2.2 million bpd cuts that began in April this year.
OPEC-only production grew by 524,000 bpd to 28.44 million bpd, driven by a jump in the output of Saudi Arabia, the cartel’s biggest oil producer which is entitled to the biggest monthly increments in production, per the OPEC+ agreement. The Kingdom raised its crude production to 9.961 million bpd in September, up by 248,000 bpd from August.
While Saudi Arabia and OPEC+ are boosting production and exports, the market is concerned that weakening global demand after the summer peak would lead to a glut within weeks. Analysts are also concerned that the Saudis are reducing their spare production capacity, exposing oil prices to a hike in case of a sudden supply shock.
By Michael Kern for Oilprice.com
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