Saudi Arabia has promised to do “whatever it takes” to end the global oil gut. If it cuts supplies in November by as much as it pledges, the kingdom will reduce production and exports alike by more or less a million barrels a day compared with last year.
And that’s about all the world’s biggest oil exporter—and linchpin of a global plan to bolster crude markets—can do to prop up prices: pump and sell less of the stuff.
State-run Saudi Aramco plans to pump about 9.77 million barrels a day next month, in what would be its smallest output since January 2015. That’s about one million barrels a day less than the 10.72 million it pumped in November 2016. The Saudis disclosed their production plans on Monday when the energy ministry announced that Aramco will supply buyers with less oil than they asked for in November. Much less.
The country’s customers told the state oil company, known formally as Saudi Arabian Oil Co., that they wanted more than 7.7 million barrels of crude a day. The producer told them they could only have 7.15 million barrels a day.
Sure, that’s more than the 6.68 million barrels that Bloomberg tanker tracking data show the Saudis to have exported in September. But Saudi Arabia exported more than 8 million barrels in November 2016, and shipments usually drop during the summer months as the desert kingdom uses more of its own oil to keep power plants and air conditioners running at full tilt. What’s more, this summer coincided with Saudi Energy Minister Khalid Al-Falih’s efforts to curtail sales and drain global crude stockpiles.
Customers will have to look elsewhere for the 560,000 barrels of crude a day that they asked for but won’t be getting from the Saudis. They could ask fellow OPEC members Ecuador or Qatar, but buyers would need pretty much all the oil that either country produces—if it were even available—to make up for the shortfall in Saudi sales.
The Saudis, who said they expect other participants in the output-cuts agreement to follow their “extraordinary leadership,” must be hoping that their partners in the deal don’t oblige, and steal, the kingdom’s customers.