- Saudi Arabia’s crude oil exports fell in July due to increased domestic consumption for power generation.
- Despite a rise in production, Saudi Arabia maintained its pledge to keep output around 9 million bpd.
- Saudi Arabia is looking to attract more customers in Asia by slashing its official selling prices for October.
Saudi Arabia exported 5.74 million barrels per day (bpd) of crude oil in July, down by 306,000 bpd from June, and the lowest export level since August 2023, the latest data from the Joint Organizations Data Initiative (JODI) showed on Thursday.
Saudi Arabia, the world’s top crude oil exporter, typically lowers its crude oil exports in the summer as it uses more crude domestically for direct burn at power plants. Electricity demand in the desert in the summer months is soaring amid scorching temperatures.
Saudi Arabia saw its direct use of crude rise by 211,000 bpd in July, to 770,000 bpd, a 7-month high, according to the JODI data which compiles self-reported figures from individual countries.
Crude oil production in Saudi Arabia increased in July, by 111,000 bpd to 8.94 million bpd. Despite the rise in production, exports fell, suggesting that the increase was used up by direct crude use for power generation.
Even with the July rise in crude oil production, Saudi Arabia fulfilled its pledge to keep output “at around 9 million bpd” as it said when it announced its voluntary 1-million-bpd cut on top of its share of reduction as part of the OPEC+ deal.
Going forward, Saudi Arabia is looking to attract more customers in Asia, where demand has underwhelmed so far this year.
Earlier in September, the Kingdom slashed its official selling prices (OSPs) for October to Asia, amid worsening refining margins in China and the wider Asian region and weaker Dubai benchmark prices.
The price of Saudi Arabia’s flagship grade, Arab Light, to Asia for October was cut by $0.70 per barrel compared to the September pricing.
As a result, demand from the largest refiners in China has increased, while nominations from major private refiners with allocated import quotas have held stable for the next month.
By Charles Kennedy for Oilprice.com
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