Saudi Arabia to slash oil exports by 800,000 barrels per day

Galtero Lara
Enero 12, 2019

The Middle Eastern producer's energy minister, Khalid Al-Falih, also said that the pledged reductions of 1.2 million barrels a day are "more than sufficient to balance the market".

For nearly 30 years - despite rising production, large swings in oil prices and improved technology - Riyadh has annually reported the same number for reserves at around 261 billion barrels, according to a statistical review by BP.

"We are serious about restoring balance to the market", he told a press conference in Riyadh "We are concerned about volatility in the oil market".

The Saudi Arabia-based oil and gas giants, Saudi Aramco, is planning to delve into the debt market during the second quarter in order to fund the purchase of petrochemical company, Sabic, in what is set to be its first ever worldwide bond, according to Bloomberg. "We have seen peaks and drops in prices completely unjustified by the fundamentals". It is the third biggest producer after the United States and Russian Federation with around 10.6 million barrels per day.

They have partially rebounded in the past few days after a new deal came into effect, under which Opec and non-Opec oil producers agreed to trim output by 1.2 million bpd.

As for the Saudi Arabia cuts, Martin Essex, analyst at Daily FX, said in a report sent to UPI that the market was optimistic that it could help reduce supply. The global benchmark crude traded at a premium of $8.74 a barrel to West Texas Intermediate for the same month. The kingdom took a first step in that direction on Wednesday by releasing the first audit of Aramco's oil and gas reserves since 1980. Its crude reserves totaled 268.5 billion barrels (Bbbls) at year-end 2017, up from the previous estimat of 266.3 Bbbls.

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It said the new figures have been backed by an independent third-party certification by leading consultants DeGolyer and MacNaughton (D&M).

Oil rose for a 10th consecutive day in London, heading for its longest run of gains on record, as OPEC cutbacks reined in supply while reassurance from the Federal Reserve buoyed the outlook for demand.

That the carbon intensity of Saudi Arabia's oil and corresponding gas flaring are among the very lowest in the world, and he called on the industry to use this metric alongside profitability.

But the kingdom has posted budget shortfalls each year since a major 2014 crash in crude prices, and has turned to borrowing as well as pursuing economic reforms. Falih said on Wednesday the kingdom would still go ahead, and list the company by 2021.

It was the first time Riyadh has tapped global debt markets since the October murder of journalist Jamal Khashoggi, which tarnished Saudi Arabia's public image. The closest it has come to issuing debt was when it raised 11.25 billion riyals (US$3 billion) in a debut, local-currency, Islamic-bond sale.

The operation was not fully concluded, so the interest rates have not yet been calculated.

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