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Saudi oil exports suge, seeks to sell more
Top oil producer Saudi Arabia increased exports sharply in the past week and is offering extra supplies to its biggest customers worldwide in what industry sources said appeared to be a bid to tame runaway crude prices.
February 25, 2012 12:17 by Reuters
Saudi exports surged to just over 9 million bpd in the last week, compared to an average of about 7.5 million for January, three industry sources said.
“Those export numbers are very reliable but they’re only for a week so they don’t tell you whether or not they’re going to sustain these levels,” said one industry source.
“Exports could be bunched for a week but this is an unusual export number,” said another.
Oil industry watchers routinely assess output from Saudi Arabia and other OPEC producers on a monthly basis to smooth out variations over shorter periods.
Saudi oil officials did not respond to requests for comment.
If Riyadh were to maintain exports at 9 million bpd it would imply record volumes from OPEC’s leading producer of 11 million bpd, up more than a million bpd from last month. Saudi currently is using about 2 million bpd domestically.
Riyadh pumped about 9.75 million bpd in January, industry surveys show.
The export data for the past week shows sales to Asia climbing to 6 million bpd with volumes bound for the United States approaching 1.5 million, a three-year high.
Other sources at oil companies who buy Saudi crude said that Riyadh was offering extra oil both in addition to existing long-term contracts and on a one-off “spot” basis.
One said Riyadh appeared to be seeking to “control the price” by offering more oil.
“They have been accommodating to allow people to take extra oil,” said one source at a leading customer of Saudi Arabia, who declined to be identified. “It is basically an addition to your term contracts.”
Another said spot sales were being made available, a rare move by state oil company Saudi Aramco which prefers to market its crude via long-term contracts.
Brent crude rose to a nine-month high of $124 a barrel this week as financial sanctions on Iran persuaded Iranian oil buyers in Europe and Asia to cut back and seek supplies from elsewhere. Brent in euros this week hit a record high above 93 euros a barrel.
European Union countries who imported about 700,000 bpd of Iranian oil late last year will ban Iran’s oil from July 1.
As well as extra Saudi oil, Iran’s top European customers are seeking more from Iraq, Libya and Russia but Saudi Arabia is the only country that holds significant volumes of spare capacity.
Saudi Arabia earlier this year identified $100 a barrel as a fair price and Riyadh is sensitive to the concerns among consumer countries about high fuel prices slowing economic recovery.
Concern is rising in the administration of US President Barack Obama about gasoline prices which jumped 9 cents in the past week to average $3.61 a gallon at the pump. (By Richard Mably and Alex Lawler; Additional reporting by Peg Mackey; editing by Keiron Henderson)