Just like everyone else, AMEinfo thought Saudi was pumping 500,000 barrels of oil extra per day, as per an OPEC agreement that addressed oil output disruptions from Venezuela and falling output from Iran, a country subject to sanctions on its oil exports which will come into effect next November.
An announcement from Washington due later on Monday will detail renewed U.S. sanctions against OPEC’s 3rd largest producer Iran, set to be reinstated on Tuesday.
Saudi Arabia has told OPEC in early July that it pumped 10.488 million barrels per day (bpd) of crude oil in June, an increase of 458,000 bpd from the level it said it produced in May, OPEC sources told Reuters on Thursday.
Oil prices rise after Saudi output dips
Saudi Arabia pumped around 10.29 million barrels per day (bpd) of crude in July, two OPEC sources said on Friday, down about 200,000 bpd from a month earlier.
According to Reuters, oil prices rose on Monday after Saudi crude production registered a surprising dip in July and as American shale drilling appeared to plateau.
Spot Brent crude oil futures were trading at $73.68 per barrel on Monday, up 47 cents, or 0.65 from last close.
U.S. West Texas Intermediate (WTI) crude futures were up 37 cents, or 0.55, at $68.86 barrel.
Still, with Russia, the United States and Saudi Arabia now all producing 10 million to 11 million bpd of crude, just three countries now meet around a third of global oil demand.
Who is stockpiling?
Key OPEC oil producers seem to be finding it harder than expected to sell their output overseas with resulting build-up in their stockpiles potentially helping them offset the drop in Iranian supplies, as U.S. sanctions start to bite deeper, Bloomberg reported.
“Crude oil exports from the five Persian Gulf Arab members of OPEC fell by about 1.1 million barrels a day last month, after surging in June,” according to Bloomberg tanker tracking.
“For Saudi, if the oil hasn’t been consumed or left the country, it must have gone into local storage tanks.”
Bloomberg said the kingdom’s stored crude has been falling for almost three years and continued to drop as Riyadh cut production last year.
Saudi stockpiles fell by 95 million barrels, or 29%, between October 2015 and the end of April 2018, according to The Joint Organisations Data Initiative (JODI) data, the lowest since 2011.
“Yet this depletion may be coming to an end. Inventories rose for the first time in seven months in May. There’s clearly room for them to keep rising and good reason too,” said Bloomberg.
“The return of U.S. sanctions on Iran has already hit the country’s oil exports. Bloomberg tanker tracking in July shows the country’s crude and condensate exports have already fallen by about 430,000 barrels a day, or 15%, from their April peak.”
Oil shipments resume at Bab Al Mandeb
Saudi said on Saturday it would resume all oil shipments through the strategic Red Sea shipping lane of Bab al-Mandeb, the state news agency SPA reported, as per CNBC news.
Saudi Arabia temporarily suspended oil shipments there on July 26 after attacks on two big oil tankers by Houthis.
SPA quoted Energy Minister Khalid al-Falih as saying: “The decision to resume shipping of oil through Bab al-Mandeb comes after all necessary procedures were taken by the coalition leadership to protect ships of the coalition countries.”
China begins suspending US oil shipments
Due to the rising trade tension between China and the United States, the trading arm of Chinese state oil major Sinopec has suspended imports of crude oil from the United States, Reuters reported on Friday, citing sources familiar with the plans.
Sinopec’s trading unit, Unipec, has not booked new purchases of U.S. crude oil at least until October, one of Reuters’ sources said. Yet it was not immediately clear how long the suspension of U.S. oil imports would last.
Earlier this year, Unipec had planned to trade up to 300,000 bpd of U.S. crude oil by the end of 2018, which would have been triple the volume of U.S. crude oil that it traded last year, according to OilPrice.com.
“Chinese buyers have scaled down purchases of American oil after China threatened to impose a 25% import tax on U.S. energy imports if the United States imposed additional tariffs on more Chinese products,” said OilPrice.com.
According to trade flow data by Thomson Reuters Eikon, Chinese imports of U.S. crude oil averaged 334,880 bpd between January and August this year.
Yet, only three supertankers are currently sailing to China, carrying a total of just 197,515 bpd of U.S. oil to arrive in September, the trade flow data showed.