Saudi Arabia plans to keep oil exports below 7 million barrels a day next month as OPEC’s biggest producer allocates less crude than customers demand in a bid to stabilize the market, according to the kingdom’s officials.
State-run Saudi Arabian Oil Co., known as Aramco, will cut customer allocations across all regions by a total of 700,000 barrels a day next month, the officials said, asking not to be identified because the information isn’t public. The country’s production will be lower in September than in this month, they said.
For North American customers, the kingdom will send about 300,000 barrels a day less than they nominated for oil scheduled to load in September, according to a person familiar with the matter. Reductions to European buyers will be larger, said the person, who is familiar with Saudi policy. There will also be modest cuts to Asian buyers.
Saudi Arabia is reducing allocations despite strong consumption in all regions, the officials said. While the kingdom could have produced about 10.3 million barrels a day because demand is much higher, it decided to keep output and exports suppressed, they said. The producer and its partners in the OPEC+ coalition are determined to do what they can for market stability, they said.
Global benchmark Brent crude rose as much as 3.2% to $58.01 on Thursday. Prices are still down about 12% over the past week.
Saudi Arabia, the world’s largest oil exporter, has already cut production more than required under an agreement between the Organization of Petroleum Exporting Countries and allies outside of the group to help drain inventories and reach market stability. Oil has been swept up in a global market meltdown, spurring fears it would morph into a currency war.
Prices recovered some of their losses after a Saudi official said the kingdom won’t tolerate a further sell-off and has phoned other producers to discuss a response. Still,so even if global producers decide to cut output further, they may struggle to revive prices.