EMEA News
Saudi's Oil Exports Slide, Unable to Regain Pricing Power in Asia
Saudi Arabia has once again proven to be the main booster of the Organization of the Petroleum Exporting Countries (OPEC) oil cutback agreement, with Bloomberg data showing its crude shipments for February dropping by 126,000 barrels per day (bpd): further proof it is continuing to cut supplies by more than it originally planned.
The news comes on the heels of a disclosure by OilPrice.com that slightly more than a month of production cuts has also resulted in OPEC losing about 5 percent of its market share in Asia, from 10.4 million barrels in October 2016 to over 35 million barrels in February of this year.
Carole Nakhle, director of the advisory firm Crystol Energy, said, "Under current oil market conditions, OPEC risks losing market share with further production cuts," meaning it's anyone's guess whether the cartel will extend its agreement to the remainder of 2017 - which many members said was possible but not required due to the "success" of the reductions.
Whether or not an extension would benefit the Saudis is unclear, but even though its shipments have dropped, the kingdom has not suffered the losses in Asian markets as have other members: in fact, between December 2016 and January of this year, Saudi Arabia's exports to China increased a whopping 40 percent.
And even though the increased supplies are said to be coming from floating storage, that plus on going visits to China from Saudi Arabian king Salman bin Abdul-Aziz al-Saud are viewed as an all-out effort to keep the kingdom's major customer placated.
However, the Saudis haven't been able to raise the official selling price of its light crude oil to Asia: its light crude OSP is at a 15 cent per barrel premium to Dubai crude.
As for its February reduction in crude shipments overall, the 126,000 bpd drop means the kingdom exported 7.04 million bpd last month, according to vessel tracking data compiled by Bloomberg, which stated, "Measured against the country's own figures, outflows are down by about 1 million barrels a day since December."
Last month it was reported that Saudi Arabia is looking to increase its American oil investments due to president Donald Trump's pro-energy initiatives; far from being critical of Trump's administration, Khalid al-Falih, minister of energy, industry and mineral resources, said, "We have no problem with the growth of American indigenous oil supply; I have said it repeatedly, as long as they grow in line with global energy demand, we welcome them."
