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

Dhaka,  Thu,  17 August 2017
Published : 08 Aug 2017, 22:39:23
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S Arabia cuts crude oil allocations in Sept by more than its OPEC pledge

Prices remain steady
DUBAI/SINGAPORE, Aug 8 (Reuters): Saudi Arabia will cut crude oil allocations to its customers worldwide in September by at least 520,000 barrels per day, an industry source said on Tuesday, as the top oil exporter makes good on its pledge to help rein in a global supply glut.

State oil giant Saudi Aramco will cut supplies to most buyers in Asia - the world's biggest oil consuming region - by up to 10 per cent 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 $58 a barrel in January but they have since slipped back to a $45 to $52 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 barrels per day in September, the first source said, while supplies to the United States (US) will be reduced by around 1.1 million barrels 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 million bpd.

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 Organisation of the Petroleum Exporting Countries (OPEC), Russia and other producers agreed last year to cut production by about 1.8 million bpd from Jan 1 until March 2018.

An earlier report from London adds: Oil prices steadied on Tuesday after news of lower crude supplies from Saudi Arabia offset higher output from other large producers including the United States (US).

Saudi state oil company Aramco will cut allocations to its customers worldwide in September by at least 520,000 barrels per day (bpd), sources familiar with the matter told Reuters on Tuesday.

The cut is in line with the kingdom's commitments in a supply reduction pact led by the Organisation of the Petroleum Exporting Countries designed to bolster oil prices that have been depressed for more than three years by a global glut.

But oil production remains high in many parts of the world and prices are still around half the level seen in 2011-2014.
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