Saudi 1H 2021 Oil Dynamics: Refining Prioritized Over Crude Exports

20 Aug 2021 Issue: 64 / 33 By: Jamie Ingram

Saudi crude exports in Q2 were at their lowest level since mid-2010. For Q3, the key question will be whether production increases will offset higher seasonal demand from the power sector.

The latest Jodi statistics (MEES, 20 August) shine a light on another volatile six-month period for Saudi Arabia’s critical oil sector. Having started the year with production increases, Saudi Arabia swiftly implemented a 1mn b/d voluntary cut in February, which was only fully unwound in July, and the impact weighed heavily on crude oil exports.

Looking ahead, Saudi Arabia at least has a roadmap to higher production which could see it add another 1mn b/d by the end of the year. Weakening oil prices in recent weeks have caused some observers to question the viability of near-term Opec+ tapering, but ultimately market fundamentals still point to the need for additional supplies in the second half of 2021 (MEES, 13 August). Opec+ is next scheduled to meet on 1 September, by which point the group will have eased production cuts by a further 400,000 b/d from current levels (MEES, 6 August). (CONTINUED - 729 WORDS)