Saudi oil output hits record in November

COMBINED WITH IRAN WAIVER IT CAUSED A GLUT IN SUPPLY

Saudi Arabia produced a record 11.1 million-11.3 million barrels of oil per day in November, indicating it may have ramped up production on expectations they would be able to bridge the supply gap left by sanctions-hit Iran.

But a U-turn by the United States meant keeping the supply window open for Iran by allowing eight countries, including India and China, to continue importing oil from Iran for 180 days.

This meant a 360-degree turn from a market that was short in supply to oversupply, causing a more than 36 per cent fall in Brent crude prices from a high of more than $86 (Dh315) per barrel on October 3 to $60.10 yesterday.

“Saudi Arabia responded as they promised to the US request of keeping the market well supplied and due to strong demand for its oil. Unfortunately this ramping up of the production hit the market this month when the US surprised the market by granting waivers thereby allowing Iranian oil to flow in bigger quantities than expected,” Ole Hansen, head of commodity strategy at Saxo Bank, told Gulf News.

Saudi Arabia produced 10.8 million-10.9 million barrels of oil in the previous month, according to data. The November figure breached the previous record of 10.3 million barrels per day produced in March 2015.

The disclosure comes ahead of the vital Group of 20 (G20) meeting in Argentina on Friday and Saturday followed by the Opec and non-Opec meeting on December 6.

Saudi Arabia and other producers have supported another cut in oil production to cut excess supplies in the market. Opec and its non-Opec partners have extended cooperation to ensure balance and market stability.

“Following the almost onethird collapse in the price, Saudi Arabia and others will undoubtedly seek to rein back production to support the price back to and above $70,” Hansen said.

Saudi Arabia has indicated sharper cuts in oil production from Opec and non-Opec countries at its meeting next week.

The producer group, along with Russia and others, had agreed to cut production by 1.8 million bpd from November 2017 to prop-up prices.

Francisco Quintana, head of strategy at Foresight Adviser expects a recovery in oil prices.

“Higher Saudi production will also hurt Iranian exports, but that is unlikely to be the driver of rising output,” Quintana said. “In this environment — high output now, a moderate decline at the Opec meeting — we expect prices to increase moderately before year-end, close to $70.”

11.3m bpd

produced by Saudi Arabia in November

1.8m bpd

output cut by Opec and others agreed in November 2017