Saudi Arabia’s oil production will remain below 10 million b/d through August and its exports will stay under 7 million b/d to avoid excess stock buildup in an oversupplied market, a Saudi oil source said on Thursday.
Saudi Arabia, which is pumping below its 10.31 million b/d quota under the OPEC/non-OPEC agreement, expects the positive outcome in the US-China trade talks at G20 will help to boost demand in the second half of this year amid increasing purchases in Asia, the source said.
OPEC’s biggest producer saw its output jump by 150,000 b/d in June to 9.85 million b/d, according to the latest S&P Global Platts monthly OPEC survey.
“The kingdom will continue to work earnestly with OPEC+ countries to drive inventories down to historic levels and keep them there, a policy objective that will stay in place until the current agreement ends,” said the source.
Countries in the OPEC/non-OPEC alliance agreed in a meeting earlier this month to extend the 1.2 million b/d cut accord in place since January until the first quarter of 2020.
Saudi Arabia has been pumping below its quota, making up for under-compliance by members such as Iraq, the second largest oil producer in OPEC, and Nigeria.
OPEC’s compliance with its production quotas fell sharply in June, as output gains in the month from Nigeria and Iraq shrank the bloc’s margin for remaining within the bounds of its supply cut agreement, according to the Platts survey.
The 11 members covered by quotas remain over-compliant with their committed cuts, but only by 40,000 b/d, for a conformity rate of 104%, down from May’s rate of 117%, according to the Platts survey.