A Reuters article from Oct. 18 shows exports of crude oil from Saudi Arabia fell from 7.6 million barrels per day to 7.3 million barrels per day in the month of July.
The numbers come from information materials provided by Saudi Arabia as a member of the Organization of Petroleum Exporting Countries (OPEC).
The report also shows that Saudi Arabia’s oil inventories peaked one year ago, and that crude inventories have decreased since then. Domestic refineries in the country processed 2.6 million barrels per day of crude oil in the month of August, down about 10,000 barrels per day from July.
Of the remaining capacity, national oil firm Saudi Aramco has stakes in over 5 million barrels per day, and has pledged to invest billions more dollars in traditional oil and gas energy systems, calling the next few years a “transitional period” where oil and gas production will occur in tandem with renewables and sustainable systems exploration, within Saudi and globally.
On Sept. 28, OPEC made a plan to reduce output to 32.5 million barrels per day, cutting output for the first time since 2008.
With lower oil prices causing headaches for GCC economies, what is the context of Saudi Arabia's announcement?
“August’s lower output comes at a time when Saudi, along with other OPEC nations, has agreed to cut production, putting an end to the market share war going on since 2014,” Priya Tuteja, senior manager of investment research and analytics at Aranca, told Gulf News Journal. “The gamble to kill off (the) U.S. shale industry with sustained oil production amid slowing demand left several dents to the OPEC economies, particularly Saudi, as it is the largest producer in the cartel with about one third of the total OPEC output.”
Tuteja said the OPEC agreement to cut oil production will translate to about a 0.7 percent decrease in the global oil production, without really impacting a supply glut that has driven down low prices in the past.
“Despite its potential limited impact, the news buoyed oil prices due to positive sentiments, which works in the kingdom’s favor,” Tuteja said.
Tuteja also pointed out those seasonal demand levels baked into the global energy calendar.
“The output cut also comes at a time of the year when the global oil demand is seasonally weak, due to winter months in the U.S. and refinery maintenance season in Asia,” Tuteja said. “Saudi has cut production seasonally (July to January) by 320,000 bpd every year since 2005 due to lower demand. The agreement is perfectly timed, and gives it flexibility to deal with slowing demand and help stabilize oil prices sentimentally, if not fundamentally.”
Analysts around the world will continue to look at how oil fluctuations impact Gulf Coast countries, and how they correlate with ambitious national goals in countries like Saudi and the UAE to discover new sustainable energy possibilities.