Saudi Aramco To Cut Crude Allocations By 350,000 In October

Saudi Aramco will cut crude allocations to its buyers by 350,000 barrels per day in October, according to an insider source who spoke to Reuters.

Saudi Arabia is required to cut production by 486,000 bpd in compliance with last November’s OPEC deal to reduce international crude supplies by 1.2 million bpd.

In Asia, supply cuts will total 1.8 million barrels, with Japan being the main target, the source added.

Supplies to the United States will fall to 600,000 bpd as well. Riyadh has been on a mission to reduce American inventories in order to solicit large crude orders from the world’s largest energy consumer.

The Reuters report comes at the heels of an OPEC report that shows the bloc has failed to cut exports to below 2016 levels. OPEC exported 25.19 million bpd of crude oil last month, the lowest since April this year, Thomson Reuters Oil Research said, but the eight-month average for the year to date was 25.05 million barrels, exceeding the average for the corresponding period of 2016, which stood at 24.85 million bpd.

“Crude oil exports from OPEC’s African members tumbled by 540,000 bpd month-on-month to below 5 million bpd after posting their highest export volumes in July since at least Jan. 2015, thereby breaking a four-month streak of rising exports,” the research unit said in a report on Wednesday.

According to Kpler, three African members of the cartel actually increased their exports in August: Algeria, Angola, and Nigeria. The combined increase from these three countries exceeded 350,000 bpd.

OPEC officials insist that the output cut deal is working and global supply is falling, despite export patterns. Even so, the deal might get another extension beyond March 2018, as per comments made yesterday by Russia’s Energy Minister Alexander Novak. The chance of this happening remains uncertain but the option is on the table.