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Saudi Arabia to trim oil exports further in February

12 January 2019
Saudi Arabia to trim oil exports further in February

Saudi Arabia is planning to lower its crude oil exports to around 7.1 million barrels per day (mbpd) by the end of January to help boost oil prices above $80 a barrel, The Wall Street Journal reported OPEC officials as saying on Monday.

"Oil has had a good rally as Saudi Arabia's willingness to move forward with cutting output was clearly delivered to the market", said Hong Sungki, a commodities trader at NH Investment & Securities Seoul.

He also announced a further 100,000 bpd cut in February.

"We are concerned about volatility in the oil market", he said.

"We will work with our advisers and find the right time to go to market and part of that would be a prospectus that would have appropriate financial statements and disclosures", al-Falih said, commenting on the plans for the bond sale. "We have seen peaks and drops in prices (that are) completely unjustified by the fundamentals".

But on Wednesday, Brent crude for March delivery hit US$60, up 20 per cent on the figure two weeks ago, prior to a deal between Opec members and other major producers to cut output from Jan 1.

Leading consultants DeGolyer and MacNaughton (D&M) conducted the independent certification. "The results point out that the Kingdom's reserves of oil and gas are bigger than what we have been announcing", Falih asserted.

Natural gas reserves also grew from 302.3 trillion cubic feet (8.56 trillion cubic metres) to 324.4 trillion cubic feet (9.2 trillion cubic metres), the ministry said.

In addition to Saudi Aramco concession area reserves, the Kingdom also owns half of the oil reserves in the Partitioned Zone jointly owned by Saudi Arabia and the State of Kuwait. Its crude reserves totaled 268.5 billion barrels (Bbbls) at year-end 2017, up from the previous estimat of 266.3 Bbbls.

Falih said Saudi oil remains among the cheapest in the world to extract, at only US$4 a barrel.

It was the first time Riyadh has tapped global debt markets since the October murder of journalist Jamal Khashoggi, which tarnished Saudi Arabia's public image. "But the trade negotiations between the USA and China still add some uncertainty to global financial and oil markets, possibly leading to corrections in prices in the shorter term". They said that the central bank will be especially cautious about pushing ahead with interest-rate increases after raising them four times a year ago.