Saudi crude and refined-product exports hit seasonal record

Business Friday 19/August/2016 16:49 PM
By: Times News Service
Saudi crude and refined-product exports hit seasonal record

Kuwait: Saudi Arabia raised its combined crude oil and refined-product exports to 8.83 million barrels a day in June, the highest on record for that month and the latest sign of the expansion of the kingdom’s share of global markets.
The world’s largest crude exporter typically ships less oil overseas from June to September as it burns more crude to power local electricity stations and meet extra demand for air-conditioning during the sweltering summer. The surge in June exports, as reported Thursday by the Riyadh-based Joint Organisations Data Initiative, suggests the extra output went beyond what was needed to cover this seasonal increase in domestic consumption.
"The only way for Saudi Arabia to maintain oil exports and avoid loss of market share in the summer is to increase production,” said Anas Alhajji, an independent oil analyst based in Houston. "Without record high production, the Saudis would lose market share" so they will keep boosting output for at least the rest of this year, he said.
Saudi Arabia supplied its overseas customers with 7.46 million barrels a day of crude and 1.37 million of refined petroleum products in June. The combined total is the most for that month since JODI started tracking flows in 2002. Output rose to 10.55 million barrels a day from 10.27 million in May, the data show.
Market battle
Saudi Arabia is engaged in a battle for market share with Iran and Russia and has cut prices to its customers in Asia. Iran is pushing for an increase in production following the loosening of international sanctions in January. Despite the growing competition, Opec officials have hinted at a potential deal, including a production freeze, during the next meeting of the International Energy Forum (IEA) in Algiers in late September.
Brent crude, the international benchmark, has rallied above $50 a barrel on talk of a potential freeze, despite skepticism from several analysts after a similar proposal failed in April.
"At this stage we view the mentions of a freeze as a diversion from a continued drive from Saudi Arabia to gain as much market share as it can," said Olivier Jakob, an analyst at consultants Petromatrix in Switzerland.
Saudi crude and refined products exports were 450,000 barrels a day higher in June than in the same month of 2015 and up more than 1.1 million barrels a day from June 2014. Over the same period, Iran and Iraq have also boosted exports.
Saudi Arabia told the Organization of Petroleum Exporting Countries last week that its production rose further in July, reaching an all-time high of 10.67 million barrels a day. Khalid Al Falih, the kingdom’s energy minister, last week said the country was boosting oil production not only to meet the surge in local consumption during the summer, but also "in part to meet higher demand" from overseas customers.
"We still see strong demand for our crude in most parts of the world, especially as supply outside Opec has been declining fast, supply outages increasing, and global demand still showing signs of strength," he told the Saudi Press Agency.
Saudi Arabia’s crude oil exports in the first six months of 2016 averaged 7.52 million barrels a day, compared with 7.46 million barrels a day in the same period last year, JODI data show. Production for the period climbed to an average 10.29 million barrels a day from 10.14 million barrels a day.