Will Saudi Arabia’s Crude Oil Production and Exports Hit a New Low?

Saudi Arabia’s crude oil production 

Saudi Kingdom is OPEC’s (Organization of the Petroleum Exporting Countries) largest crude oil producer and exporter. Saudi Arabia’s crude oil production is expected to fall to 9.77 MMbpd (million barrels per day) in November 2017, according to Saudi Aramco.

Saudi Aramco is Saudi Arabia’s largest state-owned oil company. Saudi Arabia’s crude oil production is expected to fall 950,000 bpd (barrels per day), or 8.8% YoY (year-over-year), in November 2017 due to OPEC’s output cut deal. This would be the lowest crude oil production level since January 2015.

Will Saudi Arabia’s Crude Oil Production and Exports Hit a New Low?

Any fall in Saudi Arabia’s crude oil production would likely have a bullish impact on crude oil (BNO) (DBO) (USO) prices. Remember, moves in oil prices impact oil exploration and production companies (FENY) (IEO) like Rosneft, EOG Resources (EOG), and Whiting Petroleum (WLL).

Saudi Arabia’s crude oil export plans  

Saudi Arabia may curb its crude oil exports to worldwide customers by 560,000 bpd to 7.15 MMbpd in November 2017. By contrast, it exported 6.7 MMbpd of crude oil in September 2017.

Saudi Arabia has been cutting its crude oil exports to drain global crude oil inventories, which would support crude oil (BNO) (USO) prices. Meanwhile, Saudi Arabia has been losing its market share in Asia and the US to OPEC members like Iraq and Iran.

Production cut deal  

Saudi Arabia and Russia are interested in extending OPEC’s production cut deal. Russia may be interested in extending the deal until December 2018. On September 22, 2017, OPEC and Russia decided to wait until January 2018 to decide whether to extend the output cut deal beyond March 2018. OPEC’s next official meeting is scheduled to be on November 30, 2017.

Saudi Arabia’s higher compliance with the production cut deal and the fall in its crude oil exports could support crude oil (BNO) (USL) prices going forward.

In the next and final part, we’ll analyze US crude oil futures’ moving averages and price forecasts.