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Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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Saudi Aramco To Deliver Full Oil Volumes To Asia In October

  • Saudi Aramco has told at least five North Asian refiners that it will supply full crude oil volumes by contract in October.
  • Saudi Arabia has committed to extending its 1 million barrels per day production cut until the end of the year.
  • After announcing its production cut extension, Saudi Arabia then increased its official selling prices for its crude going to Asia.
Saudi Arabia

Saudi Arabia’s oil giant Aramco has told at least five refiners in North Asia that it would supply the full crude oil volumes by contract next month, Reuters reported on Monday, quoting sources familiar with the plans.

Aramco, the world’s top crude oil exporter, will ship the full volumes North Asian refiners have asked for under their term contracts despite the extended production cut.

Last week, Saudi Arabia said it would extend its 1 million barrels per day (bpd) cut through December. The move reinforces “the precautionary efforts made by OPEC Plus countries with the aim of supporting the stability and balance of oil markets,” the Kingdom says.

A day later, the Kingdom announced yet another increase in its official selling prices (OSPs) for its crude going to Asia in October. The price of Saudi Arabia’s flagship crude grade, Arab Light, was raised by $0.10 cents per barrel to $3.60 a barrel over the Oman/Dubai average, the Middle Eastern benchmark, off which grades going to Asia are being priced.

Yet, the price increase was much smaller than an expected hike of $0.45 per barrel in a Reuters survey of five refining sources.

The extension of the Saudi production cut, and Russia’s pledge to also extend its 300,000-bpd export reduction until the end of this year, have pushed Brent oil prices above $90 per barrel for the first time this year.

The market hasn’t seen the full impact of Saudi Arabia’s extra production cut, which could lead to a drastically tighter market if the world’s top crude oil exporter keeps export levels low, according to Vortexa.

Saudi Arabia could be able to single-handedly tighten the market in the fourth quarter, even without the help of other OPEC+ producers, if it keeps export levels as low as it did in August, David Wech, Chief Economist at Vortexa, wrote in a note last week.

By Tsvetana Paraskova for Oilprice.com


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  • Mamdouh Salameh on September 11 2023 said:
    I still maintain that the Saudi voluntary production cut of 1.0 million barrels a day (mbd) announced in June 2023 and extended to the end of the year has nothing to do with the market and everything to do with Saudi production difficulties.

    Otherwise, why is Saudi Arabia sacrificing lucrative exports at a Brent crude price of $90 a barrel which is higher than the price the Saudis need to balance their budget? Also why are they now telling their North Asian refiners that they will supply full crude volumes by October?

    Saudi production is falling because of depletion and aging giant oilfields. After all, 90% of Saudi production has for the past 74 years been coming from five giant but aging and fast-depleting oilfields (Ghawar, Safaniya, Hanifa, Khurais and Zuluf) all of which are more than 74 years old and are being kept producing by a huge injection of water.

    Saudi real current production is estimated at 6.0-6.5 million barrels a day (mbd) with 3.5-4.0 mbd coming from stored oil to raise the level of supply to 10.0 mbd. Saudi exports were estimated in August at 5.6 mbd, down from 6.3 mbd in July. By cutting production by 1.0 mbd, Saudi Arabia gives itself time to replenish its stored oil without which it could neither perform any major maintenance work nor would it be able to have any influence on the market and prices.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert

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