Saudis Ease Sacrifice of OPEC Oil Cut With Record Fuel Exports
Saudi Arabia’s exports of diesel and gasoline soared to a record in January, underscoring a big advantage the world’s largest oil exporter has over other producers who’re more dependent on shipments of lower-value crude.
While the kingdom kept crude output below an OPEC-agreed cap, its shipments of diesel, gasoline and other fuels surged by 27 percent to a record 1.912 million barrels a day in January, according to data from the Joint Organisations Data Initiative in Riyadh. It means the country’s total oil shipments overseas exceeded those in October 2016, the reference month for a deal with OPEC and other producers to curb pumping.
Soaring products flows have taken total Saudi oil exports above their October 2016 level
As the biggest member in the Organization of Petroleum Exporting Countries, Saudi Arabia is jointly spearheading a coalition of crude oil producers with Russia to clear a supply glut that was created as U.S. shale oil output soared.
Khalid al-Falih, the Saudi Arabia’s energy minister, has said his country is leading fellow OPEC members “by example,” routinely cutting crude production by more than it needs to under the 2016 agreement.
While that’s true — it pumped 9.98 million barrels a day in January, remaining below a cap of 10.058 million — traders don’t just care about what gets pumped from oil fields.
Saudi Arabia has significantly expanded refining capacity in recent years, giving it an option to sustain revenues during crude-supply cuts that isn’t generally available to other OPEC nations, said Giovanni Staunovo, an analyst at UBS AG in Zurich.
The kingdom’s sales of gasoline jumped by 51 percent to 328,000 barrels a day amid sliding domestic demand, while outflows of diesel increased by 13 percent to 803,000 barrels a day. Both were at their highest levels in data going back to the start of 2002. Exports of kerosenes were also a record.
Only four other OPEC countries — Iran, Iraq, Kuwait and the United Arab Emirates — pumped more crude on a daily basis in January than Saudi Arabia exported to buyers of its refined fuels.
Saudi Arabia’s exports of crude oil and refined fuels combined climbed to 9.082 million barrels a day in January, the highest since December 2016, the month before the cuts were implemented. Crude shipments were the highest since March.