saudi silence

  1. 357
    2,166 Posts.
    lightbulb Created with Sketch. 1
    Saudi silence on OPEC cuts puzzles market

    4 Nov 2008

    SINGAPORE - Saudi Arabia has yet to inform its customers of any cuts in November oil supply, trade sources in Asia said, raising questions about its resolve to quickly implement OPEC curbs agreed just 10 days ago.

    While Kuwait, the United Arab Emirates and Nigeria have all told refiners and traders to expect less oil in both November and December, state oil firm Saudi Aramco has maintained radio silence since OPEC agreed on October 24 to a 1.5 million barrel per day (bpd) or five per cent cut, meant to take effect from November 1.

    Saudi Arabia will not cut crude supplies in November for Indian refiner Bharat Petroleum Corp Ltd, a source at the state-run Indian firm said. BPCL is the third-biggest buyer of Saudi crude in India.

    "Saudi Arabia has sent us a general letter informing us about a cut in line with OPEC decision. They have applied no cut in November lifting for us but a decision on supplies for December is yet to be announced," a company official, who declined to be named, told Reuters.

    With the first tankers of November-loading Saudi crude already setting sail for refiners around the world, traders in Asia said the next opportunity to make cuts could come when the kingdom confirms loading schedules for December early next week.

    Sources at oil refineries in Europe also said they had received no cut in Saudi supply in November, although a reduction could come in the following month.

    "I don't think they will cut retroactively but I think December is going to be very tight," one of the sources said.


    A reduction in December liftings from the world's biggest oil exporter would not be felt in the market until the oil reaches refiners' tanks in January, limiting the impact of OPEC's effort to put a floor under tumbling world prices.

    "I think OPEC is serious but I wonder why the cut notice takes time. It's too late for the November programme," a trader with a term lifter said.

    Saudi Arabia normally informs customers of how much oil they can load by about the middle of the preceding month to allow them time to arrange vessels and buy extra crude on the spot market.

    But it has in the past made cuts even after agreeing on initial loading schedules, for instance by limiting operational tolerance that allows buyers to take 5-10 per cent more crude.

    "It is hard to predict (what will happen)... If they were going to make a cut, they should have done it by now," another term lifter said.

    Pressure for Saudi Arabia to go public mounted at the weekend as OPEC president Chakib Khelil told Algerian radio that the kingdom was key to OPEC's success and warned that prices could be affected if the world's biggest oil exporter took its time over the cuts.

    Other producers have already come forth with cuts, the latest of which was announced on Saturday as Iran's oil minister Gholamhossein Nozari said France's Total had been informed of an oil sales cut and that sales to other companies would be announced later.

    Lifters said on Monday they had yet to hear of a similar cut in Asia by National Oil Iranian Company (NIOC).

    Kuwait told its lifters on Friday that it would cut supplies by five per cent from November, while the Abu Dhabi National Oil Co (ADNOC) was first to announce cuts last week with a five to 15 per cent reduction in December loadings but a modest five per cent cut in November cargoes of Upper Zakum.

    One lifter said it may not be too late for Saudi Arabia to come out with a cut in November liftings yet.

    "We usually arrange loadings by the fifth of the month so Aramco still has one or two days. I think they will cut, and by five per cent," the lifter said.

arrow-down-2 Created with Sketch. arrow-down-2 Created with Sketch.