OPEC’s Middle East Oil Flows Rise Despite Deeper Production Cuts
Saudi shipments in January rose by 356,000 barrels a day, from their December level, averaging 6.97 million.
(Bloomberg) -- Crude supplies from OPEC’s Middle East oil exporters, excluding Iran, edged up in January, the first month in which deeper output cuts agreed for the first quarter of 2020 should have seen smaller flows.
Saudi Arabia, Iraq, Kuwait and the United Arab Emirates, which together account for about 70% of OPEC’s entire production, shipped an average of 15.35 million barrels a day of crude and condensate in January, tanker-tracking data compiled by Bloomberg show. That was an increase of 64,000 barrels a day from December.
The new targets may soon be out of date, though, as the group considers meeting with its allies to formulate a response to the squeezing of Chinese oil demand by the coronavirus outbreak. Further output cuts seem likely.
Saudi shipments in January rose by 356,000 barrels a day, from their December level, averaging 6.97 million, their highest since October, when flows rebounded after the impact of the attacks on Abqaiq and Khurais the previous month. Exports from the country’s Yanbu terminal on its Red Sea coast slipped by about 20,000 barrels a day to 806,000. It’s likely that some of this has come out of storage tanks at the kingdom’s export terminals, as Bloomberg’s monthly OPEC production survey shows that wellhead production fell.
Iraq’s exports from its Basra Oil Terminal rose month-on-month by 208,000 barrels a day to 3.44 million. The higher exports appear to contradict Iraq’s attempt to bring its output into line with the target agreed as part of the OPEC+ deal in early December.
Flows from Kuwait fell sharply in January, dropping by 253,000 barrels a day, or 11%, to just over 2 million. The U.A.E. also shipped less crude and condensate last month, with exports falling by 248,000 barrels a day, or 8%.
Observed shipments from Iran have been excluded, as tankers leaving the country often only appear in tracking data several weeks later, once they have reached chokepoints like the Strait of Malacca or the Suez Canal, making early assessments of flows from the country less reliable. Tracking signals from two tankers carrying an estimated 3 million barrels of Iranian crude or condensate appeared during the first half of January in positions that the ships could only have reached if they had left the Persian Gulf in December, raising the country’s observed December shipments to 230,000 barrels a day from an initial estimate of 129,000.
With nearly 20 million barrels of oil on ships from OPEC’s Middle East exporters yet to signal a final destination, estimates of flows to individual countries are subject to revision.
Persian Gulf crude flows to India, the closest major market, rose in January to top 3 million barrels a day. Shipments from Iraq soared by almost 430,000 barrels a day to 1.35 million, their highest level since output cuts began at the start of 2017. In contrast, Saudi flows fell by 194,000 barrels a day to their lowest in four months.
Flows to the U.S. edged higher in January, rising to 548,000 barrels a day. Despite the increase, this figure was still the second lowest in data going back to January 2017. A voyage time of about six weeks to both the East and West Coasts of the U.S. means that actual flows often don’t become apparent for several weeks after loading.
Observed shipments from Persian Gulf OPEC countries, excluding Iran, to China fell to their lowest level in seven months in January, as the country wound down for the Lunar New Year holiday and was then hit by the coronavirus that saw the holiday extended, cities placed in quarantine, and flights and train services cut. Flows from Iraq’s Basra terminal were hit hardest, falling by almost 180,000 barrels a day, or 17%.
Shipments from the region to Japan fell further in January, dropping to their lowest level since May, with less oil shipped from all four countries. Saudi shipments to Japan equaled those in July, which were the lowest in data going back to January 2017. For the first time since August, Iraq shipped no crude at all to Japan last month.
Flows to South Korea, the other big Asian buyer of Persian Gulf crude, rose by more than 30,000 barrels a day, or 2%, in January. The biggest increase in both volume and percentage terms came from Saudi Arabia, where shipments gained by 146,000 barrels a day, or 20%.
Note: The figures above exclude exports from northern Iraq via Ceyhan in Turkey but include outflows from the U.A.E.’s Indian Ocean coast and from Saudi Arabian Red Sea ports. They include crude and condensates, a light form of oil extracted from gas fields. Figures for flows to individual destinations are subject to change, especially when ships pass transit points like Singapore and the Suez Canal.
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To contact the reporter on this story: Julian Lee in London at jlee1627@bloomberg.net
To contact the editors responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net, John Deane, Rachel Graham
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