Saudi Arabia's Crude Stockpiles at Record High as Exports Fall

  • Oil exports fell in July for the third time in four months
  • Crude oil production dropped for first time since February

Saudi Arabia’s crude stockpiles rose to a record in July after exports by the world’s biggest oil shipper declined for the third time in four months.

Commercial petroleum stockpiles increased to 320 million barrels, the highest since at least 2002, from 319.5 million barrels in June, according to data Sunday on the website of the Riyadh-based Joint Organisations Data Initiative. Crude exports slumped 1.2 percent to 7.28 million barrels a day after hitting a record 7.9 million barrels in March. Overseas shipments declined every month since then except in June.

Brent crude oil prices have slumped 17 percent this year as Saudi Arabia led the Organization of Petroleum Exporting Countries in boosting production to keep market share amid a global supply glut. The failure of producers to cut output fast enough may require prices to fall near $20 a barrel to clear the surplus, Goldman Sachs Group Inc. estimates. Brent was at $47.84 on Monday.

Saudi Arabia cut back on oil production by 1.9 percent in July, the first drop since February, to 10.36 million barrels a day, according to the JODI data. Saudi Arabia told OPEC its June production of 10.564 million barrels daily was a record, exceeding a previous all-time high set in 1980.

Saudis ‘determined’

“It seems that the Saudis are determined to keep their market share at above 10.2 million barrels a day,” Essam al-Marzouq, Kuwait-based independent oil analyst and former vice president at Kuwait Petroleum International, said by phone on Sunday. “In the case when exports are down, they will not scale back on production and will store the crude at home or even abroad."

Saudi Arabia boosted diesel exports in July to 441,000 barrels a day from 308,000 barrels in June even as production declined to 941,000 barrels from 1.01 million barrels, JODI data show.

The nation wants to keep storage tanks full, partly to feed two new refineries, a person with direct knowledge of the matter said in July. Refineries processed 2.21 million barrels a day in July, up from 2.09 million barrels in June, according to JODI. Saudi Arabia has built storage tanks with new refineries at Yanbu and Jubail, and domestic capacity will increase after the new Jazan refinery starts in 2017, the person said.