Saudis are slashing their oil imports to make room for new oil supplies, and the oil market may rebound again after the oil price bloom, according to analysts at Oilprice.com.
“Oil is trending up again,” says analyst Kevin Fenton, who focuses on energy prices.
Saudi Arabia has been cutting its oil imports, and oil production from the country has dropped to a record low. “
It could be a boost for the U.S. shale oil industry.”
Saudi Arabia has been cutting its oil imports, and oil production from the country has dropped to a record low.
Saudi Arabia’s production has fallen to 1.75 million barrels per day (bpd) in March, from 1.8 million bpd in February.
That compares with 1.85 million bpm in February and 1.94 million bps in March 2016.
Saudi is the world’s largest producer of oil and is one of the world most important exporters of crude oil.
Saudi imports dropped by more than $1.5 billion to $57.8 billion in March from $58.3 billion in February, according the U of T Energy Institute.
The United States, Canada, and Mexico also imported less oil in March.
Canada’s imports from Saudi fell by $3.1 billion to about $35.9 billion, while Mexico’s fell by about $1 billion, according U.N. data.
Saudi’s OPEC oil ministers met Monday in Riyadh to try to find a deal that will keep prices low enough to lift oil prices, but it remains unclear what the country can do to boost output.
Fenton says Saudi is likely to try and limit the supply of crude to around 1 million b/d, but that may not be enough.
“We are seeing a bit of a slowdown in the market,” he says.
“There is still a lot of demand.
Saudi has a lot to do in the short term to boost production.”
Fenton adds that Saudi could reduce production from its massive Petroleos de Venezuela oil fields, which are located in the middle of the country and require more infrastructure.
“But that would be a massive undertaking and they are going to have to pay for it, and that will be one of those expensive steps they take to stimulate demand,” he said.
The Saudis have also cut the output of its oil fields in the northern province of Arbil, which is home to Iraq’s largest oil refinery.
Saudi announced in March that it would limit production in the area by 1.4 million bpc to allow for an investment in infrastructure and production.
“The Saudi economy is still very dependent on oil exports,” Fenton said.
“If the Saudis are going down in price they are probably going to cut their production, because they can’t sell it at current prices and they can only sell it if they are able to raise prices to offset the cost of those prices.”
Saudi has had its oil production cut by more of a factor of five to five since the price of crude started rising in 2014.
The Organization of the Petroleum Exporting Countries (OPEC) said in January that it was in talks with Saudi to find an agreement to keep oil prices low for as long as possible.
Saudi, which has the world market, says it will remain in the $100 oil price.
However, Fenton believes the price will fall, so the Saudis may want to cut output again.
“I think they will be in a bit more of the same position as they were in March,” he added.
“They may cut output, but I don’t think it will be enough to keep the price low enough.”
Fentons forecast that Saudi will cut production by about 3.5 million bp this year and by 3.75 mb in 2020.
He also thinks Saudi will be able to continue cutting output until 2018 or 2019.
“My guess is the Saudis will cut output by 2 million bd and by 1 million in 2020,” he explained.
“This will be a very large cut, and they will have to be willing to make this payment.”
Saudi cut production in March as the price rose.
Fentions says that this is unlikely to change and the price may fall again, but “I don’t expect that to happen until 2020.”
The Saudis may cut production again in 2020, but Fenton thinks they will not cut as much as they did in March because they are waiting for a stronger economic rebound from the Middle East.
“Saudi has had a very good year in the oil markets, so they probably won’t have a great year this year,” he wrote.
“At the moment, Saudi is very dependent and they have a lot on oil production to sustain their economy.”
Fentsons is not surprised by Saudi’s decision to cut production.
The kingdom has long been an oil exporter, and its output has increased every year since the end of World War II.
“Its economy is very fragile, and if you have a strong economy and the population