As the kingdom of Saudi Arabia is all set to unilaterally slash 1 million barrels a day from its crude oil production starting July, its shipments to the west could get much more affected than its exports to Asia, which happens to be its primary market and also lacks transparent oil inventory feedback like the US does, as per one of the columnists from Bloomberg.
It is well to be noted that on various occasions in the time that has gone by, Saudi Arabia has prominently gone on to lower its crude shipments to the US in the endeavour to tighten that market, which apparently goes on to report oil as well as product data on a weekly basis, unlike nations like India and China, which rarely, if at all, report strategic or commercial oil stockpiles.
Significantly, early in June, the producers in OPEC took a decision to keep the present cuts until 2024; however, the consortium’s top producer, Saudi Arabia, remarked that it would voluntarily lessen production by a million barrels per day in July to almost 9 million barrels per day. The cut can very well be extended beyond the month of July, said Prince Abdulaziz bin Salman, the kingdom’s energy minister.
The level of production in July will go on to be the lowest that the country has ever hit since 2011, excluding the pre-cuts post-COVID-19 outbreak in 2020 and a deliberate lowered production post-the attack on Aramco’s factories in September 2019.
Even after the cut in production that the Kingdom announced for July this year, Aramco, which happens to be the world’s largest exporter of crude oil, reportedly assured a minimum of five North Asian refiners that they were going to get the full crude volumes that they had asked for for the month of July.
The fact is that by prioritising supplies to the evergreen Asian market, Aramco may very well lower the shipments to the US so as to force a major tightening of the market that would thereby be reflective in the inventory reports. Furthermore, Aramco happens to be the controller of the largest refinery by capacity in the US, Motiva, and can very well influence supplies to the 630,000 barrels per day facility located in Port Arthur as well, remarks Bloomberg.