Bloomberg: Saudi Arabia cannot save oil market

Saudi Arabia is not prepared to do what it takes to support oil prices, we believe, and this conclusion was based on statements by a government official that the kingdom would not be tolerant in light of the continuing low prices.

This comes at a time when the Russian Energy Ministry said that "it is very important to act responsibly and give the market what you need oil."

According to Bloomberg's report by oil industry strategist Julian Lee, this reflects Moscow's non-compliance with specific quantities of production agreed with OPEC last December, contrary to what is believed.

Russia pumped 11.32 million barrels per day (bpd) in the first half of August, an increase of about 180,000 bpd compared with July, which is also higher than Russia's 11.19 million bpd.

Moscow will be able to afford low prices compared to Riyadh, where it has benefited from US sanctions on exports from Iran and Venezuela to increase its oil income by about $ 1 billion since last November.

The Russian Ural is a good alternative to Iranian crude for refineries in European countries, especially in light of the high value compared to the value of Brent crude.

The expert questioned the fate of Saudi Arabia's OPEC partners, including Iraq, at a time when oil tanker data collected by Bloomberg website indicated that its crude exports in the first half of August hit their highest level in three months, and the inflows from West Africa is active this month.

Riyadh position
After fulfilling its December promise and already cutting much of its oil production, Riyadh signaled its unwillingness to shoulder the burden alone, the writer said.

Saudi Energy Minister Khalid al-Falih said at a recent meeting at OPEC headquarters in July that the Saudis had cut production "enough".

The kingdom has not formally announced that it will cut exports by 700,000 bpd from next month. Instead, officials said 10.3 million bpd could be produced in September to meet orders.

This means that the actual production of Saudi Arabia next month may reach 9.6 million barrels per day, at a time when the Kingdom said it produced 9.58 million barrels of oil last month, indicating that it has not cut production at all.

But a Reuters report said Saudi Arabia, the world's largest crude exporter, exported 6.721 million bpd in June, down from 6.942 million bpd in May, according to data from the Joint Data Initiative (JUDI).

The kingdom plans to keep its oil exports below 7 million bpd in August and September, despite strong customer demand, to rebalance the market, the agency quoted a Saudi oil official earlier this month as saying.

OPEC and non-OPEC oil producers implemented output cuts in July at a faster-than-expected rate under the supply-cutting deal, with a commitment of 159 percent, Reuters reported in a report on Tuesday.

In July, OPEC and allies led by Russia agreed to extend oil production cuts until March 2020, to support crude prices as the global economy weakens and US production rises.