Saudi Aramco to cut June oil supply to Asia by about 7 mln barrels – source


Saudi Aramco will curb oil supplies to Asia by about 7 million barrels in June, a source with direct knowledge of the matter said, as the national oil giant plays its part in a global output cut to support prices.

The move does not necessarily mean Saudi Arabia is preparing to deepen production cuts in the second half of this year, even though OPEC has debated such a plan alongside the possibility of extending cuts beyond 2017.

Saudi Arabia, the world’s top oil exporter, often consumes more crude domestically during the hot summer months, affecting exports.

According to the June nomination plans, Aramco will cut supplies by a million barrels each to Southeast Asia, China and South Korea, the source, who did not wish to be identified, told Reuters.

The kingdom will cut supplies by a little more than 3 million barrels for India and slightly less than a million barrels for Japan, the source added. In total, the cuts should be about 233,000-234,000 barrels per day (bpd).

OPEC and other producers in December agreed to cut output by about 1.8 million bpd from Jan. 1, for six months.

Saudi Arabia accounts for some 40 percent of the pledged OPEC curbs and has reduced output by more than 500,000 bpd to slightly below 10 million bpd, with cuts concentrated mainly in medium and heavy grades.

Industry sources told Reuters in April that higher domestic demand for oil in summer would weigh on exports especially if Saudi Arabia kept production at around 10 million bpd under the OPEC agreement, which is widely expected to be extended for the rest of 2017.

Saudi Arabia burns more crude in summer for power generation, on average using 700,000 bpd for electricity to keep the population cool in the hottest months from May to August.

It is set to reduce crude burning this summer by around 200,000 bpd compared to last year, as the kingdom raises energy prices and uses more natural gas in power stations, the sources have said.

Source: Reuters (Reporting by Nidhi Verma; Writing by Rania El Gamal; Editing by Dale Hudson)

Source from : Freight News