Saudis or­der oil cuts to US, Europe

Kuwait Times - - BUSINESS -

SIN­GA­PORE/TOKYO/DUBAI:

Saudi Ara­bia has told its US and Euro­pean cus­tomers it will re­duce oil de­liv­er­ies from Jan­uary as Rus­sia sig­nalled that a com­mit­ment from non-OPEC pro­duc­ers to join OPEC’s out­put lim­its still faced chal­lenges. Saudi Ara­bia told the cus­tomers about lower sup­plies in line with the out­put re­duc­tion agreed by the Or­ga­ni­za­tion of the Petroleum Ex­port­ing Coun­tries last week, ac­cord­ing to a Gulf oil in­dus­try source fa­mil­iar with Saudi oil pol­icy.

“We told our cus­tomers of the al­lo­ca­tions and the com­pli­ance with al­lo­ca­tions (for the cuts) for Saudi Ara­bia is 100 per­cent,” the source said. He said cuts to Asian re­fin­ers would be lower than those to Europe, the United States and to ma­jor oil com­pa­nies. “We are cut­ting more in the US be­cause the in­ven­to­ries ... are very high,” the source said. OPEC will meet non-OPEC pro­duc­ing coun­tries in Vi­enna on Dec 10, hop­ing non-OPEC will com­mit to cut­ting 600,000 bar­rels per day af­ter its own mem­bers agreed to cut 1.2 mil­lion bpd last week.

OPEC sources said nine non-OPEC coun­tries were set to join the meet­ing: Azer­bai­jan, Kaza­khstan, Oman, Mex­ico, Rus­sia, Su­dan, South Su­dan, Bahrain and Malaysia. So far only Rus­sia and Oman have pledged cuts, with one OPEC source say­ing Mex­ico could also con­trib­ute. In con­trast, Kaza­khstan plans to boost out­put in 2017 as it launches the long-de­layed Kasha­gan project. Rus­sia is ex­pected to shoul­der half of the non-OPEC cut, but yes­ter­day Moscow sig­nalled there were snags that needed to be ad­dressed be­fore a deal could be reached.

“Rus­sia sees risks ahead of the deal if ques­tions are not re­solved,” a Russian gov­ern­ment source told Reuters. “One hun­dred per­cent com­pli­ance is crit­i­cal for the deal ... It’s essential for non-OPEC to have a re­spon­si­ble ap­proach to­wards the deal,” the source said, adding there was also con­cern about rising OPEC sup­plies.

No cuts for Asia

Sources at eight re­fin­ers in Asia told Reuters they had been no­ti­fied by state oil gi­ant Saudi Aramco that in Jan­uary it was set to sup­ply full crude amounts. Of those eight, three re­fin­ers said they would load ex­tra vol­umes they had re­quested. The sources de­clined to be identified as they were not au­tho­rized to speak to the me­dia. “It’s quite telling as there are not only no sup­ply cuts, but they have given ex­tra vol­umes,” one of the sources said, in­di­cat­ing that the move un­der­scored that pro­duc­ers were ea­ger to main­tain mar­ket share in Asia. Some of the ex­tra vol­umes were com­mit­ted be­fore the OPEC meet­ing on Nov 30, when out­put cuts were agreed. “It seems that Saudis do not trust Mr Sechin af­ter his mock­ings back in 2008/2009 as he re­peat­edly promised and dis­ap­pointed them on cuts,” Com­merzbank an­a­lyst Eu­gen Wein­berg told the Reuters Global Oil Fo­rum, re­fer­ring to Igor Sechin, the CEO of top Russian oil pro­ducer Ros­neft.

“I see the Saudi strategy for Jan­uary de­liv­er­ies to Asia as a con­fir­ma­tion of this dis­trust.” Sechin has long been a harsh critic of co­op­er­a­tion with OPEC. How­ever, Sechin has kept a low pro­file re­cently and this week agreed to sell a stake in Ros­neft to a con­sor­tium of com­modi­ties trader Glen­core and Qatar - a key ally of Saudi Ara­bia in OPEC. — Reuters

Newspapers in English

Newspapers from Kuwait

© PressReader. All rights reserved.