Saudi Arabia’s oil exports to drop in summer

Crude expected to fall to 7 million bpd as supplies limit for market balance

Saudi Arabia’s crude exports are expected to fall below 7 million barrels per day ( bpd) this summer, according to industry sources familiar with the matter. Shipping data so far supports those figures.

Saudi Energy Minister Khalid al- Falih said in May that shipments were set to drop from June onward, particularly to the US, as the top OPEC producer aims to limit supply to help balance the market.

Exports in May, when the kingdom’s total production was 9.880 million bpd, averaged below 7 million bpd, three industry and shipping sources told Reuters. Early indications suggest this also remains the case this month.

“I’m only looking at the first week of June, and on the face of it, there’s not much change,” said Roy Mason of Oil Movements, a UK- based firm that estimates supply by tracking tanker shipments.

Indicating lower Saudi ex- ports, he said that tanker movements suggested shipments to the US were “less than would be seasonally normal.”

Lower exports could help reduce bloated inventories in the US, the world’s largest and most transparent oil market. High stockpiles have weighed on crude prices.

US oil imports from Saudi Arabia were above 1 million bpd from May to August last year, according to US government data. So far in June, Saudi exports to the US were below 1 million bpd, according to shipping data and industry sources.

Overall, Saudi exports are set to be lower than last year, when the kingdom shipped about 7.4 million bpd on average from May to August.

This is partly because Saudi Arabia usually burns more crude in power stations at home in the summer months to meet extra demand for power, as people rely on air conditioners to deal with temperatures that can reach 50 degrees Celsius.

This year, Saudi Arabia is also leading OPEC and other producers in a pact to cut output, a deal initially due to run in the first half of 2017 and now extended until March 2018.

Under the deal, the kingdom should not produce more than 10.058 million bpd until March. In the first five months of 2017, its output has been below that target.