Saudi Oil Exports at Seven-Month High as Refineries Return

Oil Under $28: Counting the Cost

Saudi Arabia, the world’s largest crude exporter, shipped the most oil in seven months in November in a sign that overseas refineries were getting prepared to put plants back on line after seasonal maintenance.

Saudi shipments rose to 7.72 million barrels a day, the highest since April, from 7.364 million in October, according to data on the website of the Joint Organisations Data Initiative based in Riyadh. JODI is an industry group supervised by the Riyadh-based International Energy Forum.

“This is exactly what they’ve been doing for the last year and a bit, whenever there is demand for their crude they will export,” Amrita Sen, chief oil market analyst at Energy Aspects Ltd. in London, said by phone.

Refineries are usually taken off line for repairs in September and October. Refined products exports from Saudi Arabia rose in November, to 1.18 million barrels a day from 1.09 million, according to JODI.

“You would expect to see refinery buying in November ahead of their return from maintenance in December,” Sen said. “You are seeing more oil going into Europe.”

Poland’s PKN Orlen bought three cargoes of Saudi crude, the company said this month. “The Mediterranean we think is going to be the new battle ground among Saudi, Iran and Iraq, which is why Saudi is focusing on Europe ahead of Iran’s return,” Sen said.

The Organization of Petroleum Exporting Countries couldn’t agree on production limits at its Dec. 4 meeting amid Iran’s plans to boost exports following the end of international sanctions on its economy. Brent crude prices dropped 10 percent in November, and are down another 22 percent this year at $29.15 a barrel on the London-based ICE Futures Europe exchange at 10:43 a.m. in Dubai.

The global oil surplus will persist at least until late 2016 as demand growth slows and OPEC shows “renewed determination” to maximize output, the International Energy Agency said last month.

The oversupply is probably 2 million barrels a day, even before more supply from Iran, Louis Besland, head of the Europe, Middle East and Africa oil and gas practice at AlixPartners management consultants, said by phone from Dubai. “This imbalance has been mainly created by the North American shale oil and gas in the past four or five years. That’s why Saudi Arabia believed from the beginning it’s not up to them to cut back.”

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