Saudis Started Slashing Crude Oil Exports In December
Saudi Arabia’s crude oil exports plunged by nearly 550,000 bpd to 7.687 million bpd in December 2019, down from a two-year high in November, as the Kingdom started to limit supply after the U.S. granted waivers to eight Iranian customers and the market swung into oversupply.
According to data by the Joint Organisations Data Initiative (JODI) database, which collects self-reported figures from 114 countries, the Saudi oil production also dropped in December—to 10.6 million bpd from an all-time high of 11.09 million bpd in November.
In November, Saudi Arabia’s crude oil exports had jumped by 534,000 bpd month on month to 8.24 million bpd—the highest level in two years as the Kingdom moved to offset supply losses from Iran with the return of the U.S. sanctions on Tehran’s oil industry.
The month before that, Saudi Arabia had increased its October crude oil exports to what was then the highest level since January 2017, when the initial OPEC/non-OPEC production cut deal began.
But after the U.S. granted waivers to eight key Iranian oil customers to continue importing oil from Iran until early May this year, Saudi Arabia and its allies at OPEC and non-OPEC Russia pared back production as the market started to fear a growing oversupply amid uncertain demand growth.
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As a result, OPEC and its Russia-led non-OPEC partners agreed to a new production cut deal in early December, targeting to remove 1.2 million bpd from the market between January and June this year, with Iran, Venezuela, and Libya exempted from cuts due to their ‘special circumstances.’
Saudi Arabia has reduced production more than its share of the cuts and has recently signaled that it would cut crude oil production and exports even deeper next month.
In an interview with the Financial Times published last week, Saudi Arabia’s Energy Minister Khalid al-Falih said that the Saudis would cut production to around 9.8 million bpd in March, some 500,000 bpd below the commitment in the OPEC+ deal. Saudi Arabia would be cutting its crude oil exports to near 6.9 million bpd next month, slashed from 8.2 million bpd just three months ago.