Saudi Arabia will restrain its oil exports in March despite lower domestic need for crude as Opec’s leader is pushing to eliminate fully the global oil glut and combat worries about a new cycle of oil price weakness.
The Saudi energy ministry said production by state oil company Aramco in March will be 100,000 barrels per day (bpd) below February’s level. Crude exports will be kept below 7 million bpd in March, despite a shutdown for maintenance of the 400,000 bpd SAMREF refinery, the ministry said.
“Saudi Arabia remains focused on working down excess oil inventories,” a ministry spokesman said in a statement.
“Market volatility is a common concern for producers and consumers, and the Kingdom is committed to mitigating this volatility and moderating its negative impacts by responsibly meeting its pledges” under the Opec-led deal.
The Organisation of the Petroleum Exporting Countries is reducing output by 1.8 million barrels per day until the end of 2018 as part of a deal with Russia and other non-members to get rid of a supply glut.
Opec’s cut has boosted oil prices, which in January topped $71 a barrel for the first time since 2014. But crude has since slid and hit a 2018 low of $61.76 this week, pressured by rising US output and forecasts oversupply may persist.
Saudi Arabia’s Energy Minister Khalid Al Falih sounded an upbeat note even after the price drop, saying on Wednesday he was confident cooperation between Opec and its non-Opec allies will continue to stabilise the market.
“I am confident that our high degree of cooperation and coordination will continue and bring the desired results,” Falih told an industry conference attended by Russian Energy Minister Alexander Novak and Opec Secretary General Mohammad Barkindo.
“Market volatility is unfortunate but ultimately it is the fundamentals that I watch.” Barkindo said oil demand would grow this year at healthy levels and data pointed to continued high compliance by producers in January with their pledges under the supply cut deal.
Opec has delivered more than 100 per cent of the output cuts that members pledged under the deal, according to figures from Opec and other analysts, helped in part by an involuntary drop in Venezuela, where output is falling amid an economic crisis.
Russia’s Novak, who had a meeting with Saudi King Salman, said on Tuesday oil inventories had been declining despite the rise in US production.