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Saudi Arabia cuts crude oil allocations in Sept by more than its OPEC pledge

August 09/2017

MOSCOW (MRC) -- Saudi Arabia will cut crude oil allocations to its customers worldwide in September by at least 520,000 bpd, an industry source said on Tuesday, as the top oil exporter makes good on its pledge to help rein in a global supply glut, as per Reuters.

State oil giant Saudi Aramco will cut supplies to most buyers in Asiathe world's biggest oil consuming regionby up to 10% in September to comply with a producers' deal to cut output, multiple sources with knowledge of the matter told Reuters.

The wider Saudi cuts come as some doubts have emerged about the effectiveness of the OPEC-led agreement. OPEC output hit a 2017 high in July, according to a Reuters OPEC survey, led by a rise in supplies from Nigeria and Libya, which are both exempted from the cuts.

The deal to curb output propelled crude prices above USD58/bbl in January but they have since slipped back to a USD45 to USD52 range as the effort to drain global inventories has taken longer than expected. Rising output from US shale producers has offset the impact of the output curbs, as has climbing production from Libya and Nigeria.

Saudi Arabia's crude allocations to oil majors and some customers in Europe will be cut by 220,000 bpd in September, the first source said, while supplies to the United States will be reduced by around 1.1 MMbbl in total for next month.

In August, a Saudi industry source told Reuters that Saudi exports to the United States will be below 800,000 bpd in August, as the kingdom is capping its exports worldwide this month at 6.6 MMbpd.

Under the OPEC-led supply reduction pact Saudi Arabia is required to cut output by 486,000 bpd. Of the nine Asian refineries surveyed by Reuters, supplies to six have been cut for the first time since the Organization of the Petroleum Exporting Countries, Russia and other producers agreed last year to cut production by about 1.8 MMbpd from Jan. 1 until March 2018.

Saudi Arabia and other producers last month recommended examining whether monitoring compliance with the pact should focus on exports as well as production.

High compliance by Gulf producers Saudi Arabia and Kuwait helped keep OPEC's adherence with its supply curbs at historically high figures of more than 90%.
Author:Anna Larionova
Tags:petroleum products, petrochemistry, Crude oil, Saudi Arabia.
Category:General News
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