Saudi Aramco will reduce oil supplies to Asia by about 7mn barrels in June, Reuters reports, as the oil giant plays its part in a global output cut to support prices.
The move does not necessarily mean Saudi Arabia is preparing to lower production further in the second half of this year, even though OPEC has debated such a plan alongside the possibility of extending cuts beyond 2017.
Saudi Arabia, the world’s top oil exporter, often consumes more crude domestically during the hot summer months, affecting exports.
According to the June nomination plans, Aramco will cut supplies by a million barrels each to Southeast Asia, China and South Korea, an anonymous source told Reuters.
The kingdom will cut supplies by a little more than 3mn barrels for India and slightly less than a million barrels for Japan, the source added. In total, the cuts should be about 233,000-234,000 barrels per day (bpd).
Industry sources told Reuters in April that higher domestic demand for oil in summer would weigh on exports especially if Saudi Arabia kept production at around 10mn bpd under the OPEC agreement, which is widely expected to be extended for the rest of 2017.
Saudi Arabia burns more crude in summer for power generation, on average using 700,000 bpd for electricity to keep the population cool in the hottest months from May to August.
It is set to reduce crude burning this summer by around 200,000 bpd compared to last year, as the kingdom raises energy prices and uses more natural gas in power stations, the sources have said.
