President Trump isn’t going to like this.
Offering the first indication that the OPEC+ cartel of major oil exporters intends to extend cuts, Saudi Arabia has reportedly told its clients that they will receive significantly less oil than they had requested in April, extending deeper-than-agreed oil production cuts into a second month, Bloomberg reported.
The report, which provoked a spike in oil prices, suggests that “Riyadh is determined to regain control of the oil market as prices remain well below the level that many OPEC members need to cover their government spending.” Oil rose as much as 1% on the news, before fading some gains.
However, the extension isn’t all that surprising: Responding to Trump, who demanded in a tweet that OPEC do something to curb rising oil prices, Saudi Energy Minister Khalid Al-Falih said last month that “we are taking it easy, 25 countries are taking a very slow and measured approach.”
Oil prices getting too high. OPEC, please relax and take it easy. World cannot take a price hike – fragile!
Aramco, Saudi’s state-owned oil producer, has given customers their allocations for the next month, and they’re some 635,000 barrels short of what refiners had asked for.
With Venezuela output falling further due to U.S. sanctions and power blackouts, oil refiners put in requests – or nominations in industry jargon – for Saudi crude of more than 7.6 million barrels a day for April, the person said. However, the kingdom will supply overseas customers with less than 7 million barrels a day, 635,000 barrels less than refiners asked for however, they said.
The second consecutive month of deep production cuts shows the world’s largest oil exporter is determined to re-balance the market more quickly even though events in Venezuela have left some refiners short of crude. The crisis has worsened a deficit of so-called heavy-sour crude that many refiners use to make diesel.
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