Saudi Arabia to slash oil exports by 800,000 barrels per day

Ivan Schwartz
January 12, 2019

Saudi Energy Minister Khaled al-Falih speaks at a press conference in Riyadh on January 9, 2019.

However, "a cause for concern is that the EIA (Energy Information Administration) data was not all rosy, as the crude drawback of 1.7 million barrels came below market expectation of a 2.5 million barrel draw back", he added.

Morgan Stanley now expects Brent to average $61 a barrel this year, down from a previous estimate of $69 a barrel, and USA crude to average $54 per barrel, against a prior forecast of $60.

The most recent market rumors have had it that Aramco could fund the entire US$70-billion price tag for buying 70 percent in Sabic with the upcoming bond issue. "We have seen peaks and drops in prices (that are) completely unjustified by the fundamentals".

After Brent crude hit Dollars 85 a barrel in early October, prices dived more than 40 per cent over the following two months due to oversupply and fears of a trade war between the United States and China that could slash energy demand.

The kingdom is spearheading efforts by oil producing cartel Opec to cut production and push prices up.

In December, the Organization of Oil Exporting Countries made a decision to reduce oil supply by 1.2 million barrels starting January.

Brent and the world´s other benchmark crude, West Texas Intermediate, both slumped late a year ago to 18-month lows of $49.93 and $42.36 per barrel respectively.

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He mentioned an announcement "Wednesday by Saudi Arabia that it will cut its exports in January by 10 percent compared with November".

An independent audit of Saudi Arabia's hydrocarbon reserves is a positive step for the initial public offering of Saudi Aramco and will pave the way for the state-owned oil producer to sell global bonds to fund mega acquisitions, analysts said.

Falih said Saudi Arabia's oil production has fallen to 10.2 million barrels per day, from 11 million last May.

Natural gas reserves were also revised upwards from 302.3 trillion cubic feet (8.56 trillion cubic metres) to 324.4 trillion cubic feet, the ministry said.

The audit was carried out by Dallas-based consultancy DeGolyer and MacNaughton.

So, including the D&M revision of oil reserves in the Saudi Aramco's concession area, the Kingdom's total proven oil and gas reserves as of year-end 2017 would have been about 266.1 billion barrels of oil and 324.4 trillion standard cubic feet of gas. Falih said on Wednesday the kingdom would still go ahead, and list the company by 2021.

It was the first time Riyadh has tapped worldwide debt markets since the October murder of journalist Jamal Khashoggi, which tarnished Saudi Arabia´s public image.

Other reports by GizPress

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