According to a report by the Emirati Gulf News daily, Saudi Arabia has kept crude supply to its major western and Asian customers unchanged for April, leaving customers to speculate on Saudi export policy ahead of Friday's OPEC meeting. With the Organization of the Petroleum Exporting Countries widely expected to agree another 500,000 to one million barrel per day export cut, most buyers had expected to be informed of a reduction in monthly supplies from state company Saudi Aramco.
"We're intrigued. Where are the cuts going to come from?" a trader at one oil major told the paper. "With the Saudi nominations in April, we were hoping to get a glint of what OPEC was planning."
"The allocations are the same as last month so we really don't know what they are up to," said another major buyer. "Last time they made cuts, we got a hint of it when Saudi gave us less volumes in February."
In January 10 OPEC members excluding sanctions-bound Iraq agreed to slice output by 1.5 million bpd to 25.2 million effective from February. Saudi Arabia alone reduced output by 480,000 bpd and even before OPEC ministers met, Aramco told customers of the supply cuts. But this time Riyadh has kept allocations to oil majors with worldwide systems at 20-21 percent below standard contract volumes in April, unchanged from March, traders said. Other big European customers said they also had been informed of export allocations steady from March.
In addition, Saudi Arabia, the biggest oil supplier to Asia, kept total crude supplies to its buyers in Japan, Taiwan and Korea at 12-12.5 percent below standard contracts, also unchanged from March. "It will be interesting to see what they will do on Friday," said one European buyer. "It is possible that they could trim allocations after the meeting." One customer wondered whether Saudi Arabia, which has been adhering to its quota, was telling its fellow OPEC members that they would need to curb leakage.
Meanwhile, Saudi Arabian Oil Minister Ali al-Nuaimi declined in Vienna on Thursday to forecast the size of an expected OPEC production cut, but warned that the organization’s meeting could last into an extra day, according to AFP.
The meeting on Friday of the Organization of Petroleum Exporting Countries (OPEC) is widely expected to agree a cut of 0.5-1 million barrels per day (bpd), but OPEC member states differ on the exact amount needed to keep prices stable.
Al-Nuaimi, who plays a key role within OPEC, said only that Riyadh wanted to keep oil prices around OPEC's stated 25 dollars per barrel target.
Speaking during his usual morning jog, he declined to say how big the production cut could be. Of the scheduled Friday meeting of the 11-member grouping, he said only: "It could be a two-day meeting."
The meeting is scheduled to start late Friday, after the traditional informal talks among OPEC ministers in their Vienna hotel rooms.
He also hinted that OPEC could modify a price-band mechanism established last year to try to keep crude prices within a band of 22-28 dollars a barrel, although not until next year, said the agency.
Under the mechanism, OPEC agrees to increase production by 500,000 bpd if prices stay above 28 dollars for more than 20 working days, and to cut by the same amount if it stays below 22 dollars for 10 days.
Asked about possible changes to the mechanism, al-Nuaimi said: "This year, I doubt, but next year who knows."
Meanwhile an OPEC delegation source told the AFP that Mexico and Norway, which are not OPEC members but are major oil producers, had agreed to cut their output in line with any OPEC decision – Albawaba.com
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