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Analyzing Saudi Arabia’s Crude Oil Export Strategy

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Saudi Arabia’s crude oil production 

The EIA (U.S. Energy Information Administration) estimates that Saudi Arabia’s crude oil production rose by 120,000 bpd (barrels per day) to 10.15 MMbpd (million barrels per day) in June 2017. It’s the highest level since the beginning of OPEC’s deal to reduce crude oil production by 1.8 MMbpd from January 2017 to March 2018.

Saudi Arabia is the largest crude oil producer and exporter among OPEC members. High production from Saudi Arabia has a negative impact on crude oil (IXC) (IYE) (FENY) prices. Moves in crude oil prices impact oil and gas producers such as ExxonMobil (XOM), Chevron (CVX), Northern Oil & Gas (NOG), and QEP Resources (QEP).

OPEC’s crude oil production and exports 

The International Energy Agency estimates that OPEC’s crude production fell by 920,000 bpd from October 2016 to June 2017. Market intelligence company Kpler estimates that OPEC’s crude oil exports fell by 120,000 bpd during the same period. Read Why OPEC Crude Oil Production Rose in July 2017 to learn more.

Saudi Arabia’s crude oil export plans 

On July 24, 2017, Saudi Arabia’s energy minister stated that the country would cut crude oil exports to 6.6 MMbpd in August 2017—1 MMbpd lower than the same period in 2016. It supported crude oil prices on July 24, 2017. Saudi Arabia also cut its exports in July 2017 to the US and Europe to comply with OPEC’s deal. To learn more, read Saudi Arabia’s Real Crude Oil Production and Export Plans.

Changes in OPEC and Saudi Arabia’s production and exports impact crude oil prices. An expectation of a fall in Saudi Arabia’s crude oil exports would support crude oil (IXC) (IYE) (FENY) prices. Higher crude oil prices have a positive impact on oil producers like Northern Oil & Gas (NOG) and QEP Resources (QEP).

We’ll discuss some crude oil price forecasts in the next part.

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