Saudi Arabia, the world’s largest oil exporter, reduced its crude production in December by 4.9 percent to the lowest in 19 months, according to a Gulf official with knowledge of the kingdom’s energy policy.
The cut of 465,000 barrels a day to 9.025 million is the largest monthly drop since November 2008, when the kingdom and other members of the Organization of Petroleum Exporting Countries slashed supplies amid a global recession. Saudi Arabia shipped 9.151 million barrels last month, drawing the extra oil from inventories, the official said, asking not to be identified because the information is confidential.
Brent crude futures today advanced as much as $1.53, or 1.4 percent, to a three-month high of $113.29 a barrel on the London-based ICE Futures Europe exchange. Banks and consultants including Societe Generale SA, the Centre for Global Energy Studies and Jadwa Investment Co. have said OPEC needs to trim production to prevent global markets from being oversupplied amid booming U.S. output and rebounding output from Iraq.
Saudi Arabia produced 9.49 million in November, it said in a report to OPEC published last month. The Gulf exporter last produced below this level in May 2011, when it pumped 8.895 million barrels, according to data from the Joint Organizations Data Initiative.
OPEC forecasts published in a monthly report on Dec. 12 indicate the group will need to lower output this year to keep supply and demand in balance. The group estimated that demand for its crude will average 29.5 million barrels a day in the first quarter, or about 1.2 million less than it pumped in November. At the same time, production in member country Iraq is surging as the nation rebuilds its oil industry, with output reaching its highest since 1979.
Saudi Arabian Oil Minister Ali al-Naimi said in Cairo on Dec. 21 that “demand matches supply” in the global market, and earlier that month described prices, which were about $107 a barrel in London, as “fine.”
Al-Naimi has several times cited $100 a barrel as a suitable level for consumers and producers. The kingdom needs a level of about $80 to cover its budget requirements, according to consultants Petromatrix GmbH in Zug, Switzerland.
OPEC’s 12 members are next due to meet in May at the group’s headquarters in Vienna.
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