EghtesadOnline: Saudi Arabia, the driver behind the OPEC/non-OPEC agreement to reduce oil production to eliminate a global glut, plans to reduce supplies to customers in January based on requests for shipments, according to a person familiar with the matter.
The reductions by Saudi Arabian Oil Co., known as Aramco, have already been set for tankers taking on crude in the kingdom next month, said the person, who asked not to be identified because the information is private. The cuts won’t be uniform among customers and will also be based on shipping limitations, the person said.
According to Bloomberg, the Organization of Petroleum Exporting Countries surprised markets at the end of November with an agreement to limit its collective output by 1.2 million barrels a day and then enlisting non-member nations last week to join the effort. Saudi Energy Minister Khalid al-Falih indicated Saturday that the kingdom, OPEC’s largest producer, was willing to push output below a symbolic level of 10 million barrels a day.
Cuts are most likely to come from Saudi Arabia’s Arab Light crude because many of the kingdom’s fields produce the grade, Sadad al-Husseini, a former Aramco executive vice president and currently a Dhahran-based analyst with consultant Husseini Energy, said in a telephone interview Monday. Arab Heavy won’t be affected as demand for the grade is high both at home and abroad.