The United Arab Emirates (UAE) will lower its crude oil exports to some term contract customers in its key market Asia by 5% in December amid weak demand and oil prices, five sources familiar with the plans told Reuters on Monday.
Abu Dhabi National Oil Company (ADNOC), the company pumping nearly all the oil in the key OPEC member and major crude exporter, the UAE, has notified customers in Asia that the 5% cut is part of a so-called operational tolerance clause, according to Reuters' sources. Under that clause, the export volumes could be adjusted 5% higher or lower compared to the contracted volumes, due to logistical circumstances.
The cut in the UAE's exports comes just as demand in China is weakening amid renewed Covid restrictions, while oil prices have plunged in recent days due to fears of a deeper Chinese demand slowdown, on top of fears of recessions elsewhere.
Early on Monday, oil prices slumped to their lowest level in 11 months, since December 2021. Brent Crude was down by more than 3% to trade at $80 per barrel. The U.S. benchmark, WTI Crude, was down below the $74 per barrel handle at $73.91, a 3.12% decline on the day. Oil and other commodities plunged on Monday as unrest and protests over the Covid curbs in China weighed on the markets.
Concerns about weak demand in Asia and fears of oversupply have also led to a significant decline in the spot premiums for most crude grades of Middle Eastern producers.
Some OPEC members, including the UAE and top OPEC producer Saudi Arabia, are actually cutting their crude oil production as part of the reduced OPEC+ collective production target by 2 million barrels per day (bpd). While most OPEC and non-OPEC producers haven't pumped to their quotas in months, the UAE and the Saudis have stuck to their targets, and now they are reducing production.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More