RIYADH: Saudi Arabia has stepped up its push to win more foreign buyers for its oil, according to official data released on Thursday as crude rose back above $50 a barrel. Data from Saudi Arabia to the Joint Organisations Data Initiative (Jodi) showed the kingdom is directing more of its record crude production towards export markets. Crude exports in June rose to 7.46m barrels a day from 7.3m b/d in May even as the market continues to struggle under the weight of a near two-year-old glut.
Saudi Arabia’s new oil minister, Khalid al-Falih, had told fellow Opec ministers in June that Riyadh had no intention of flooding the market, but since then its production has increased at a rate faster than it needs to meet domestic demand in the summer months.
The Jodi data showed Opec’s largest producer pumped 10.55m b/d in June, an increase of 280,000 b/d on the previous month. But only 16 per cent of that increase went towards so-called “direct use” — or the amount Saudi Arabia burns in power plants to cope with soaring summer air conditioning demand. By contrast, 57 per cent of the production increase went towards higher exports.
This month, Saudi Arabia told Opec its output had continued to increase, reaching a record 10.67m b/d in July. Mr Falih confirmed in a statement last week the kingdom has been raising output to not only to meet stronger domestic use but also to supply greater demand from customers. This has sparked concerns that Saudi Arabia is competing more aggressively for customers in an already oversupplied market. The kingdom is pushing hard to maintain its export market share in core regions — such as Asia — where it sees growing competition from rivals such as Iran, Iraq and Russia. Earlier this month it drastically cut its prices for the benchmark crude grade it sells into Asia.
“Despite the bearish sentiment engulfing the market, we still see strong demand for our crude in most parts of the world, especially as supply outside of Opec has been declining fast, supply outages increasing and global demand still showing signs of strength,” Mr Falih said in the statement. More oil has been fed into its refineries as well as the kingdom seeks to expand its exports of refined products.
