Saudi Arabia’s diesel and gasoline exports hit record highs in January. This development highlights the largest oil exporter’s advantage with sales of petroleum products.
The nation continues to maintain its crude production under the levels agreed by the OPEC. Meanwhile, sales of diesel, gasoline, and other oil-based fuels rose by 27 percent, hitting a record of 1,912 mbd in January. Saudi Arabia’s overall exports of oil and oil derivatives overcame those recorded in October 2016, which is the reference month for the implementation of the OPEC production cut agreement.
Saudi Arabia’s strategy
The largest OPEC member of the is leading a coalition to reduce the global supply glut. Said coalition was created as U.S. shale oil production soared.
Former Saudi energy minister Khalid al Falih stated that his country is motivating others to join the measure. The crude production cuts are made routinely under the guidelines established in the 2016 agreement. The objective is to learn to get by with lower production.
As a result, Saudi Arabia has increased production of oil derivatives over the past years in order to maintain revenue during the cuts. Most OPEC members have not followed this same strategy. These are the nations that occasionally pressure the organization to end the cuts to restore their oil revenues.
Saudi gasoline exports are up by 51 percent to 328,000 barrels per day, as domestic demand drops. For their part, diesel sales rose by 13 percent to 803,000 barrels per day. Both stand at the highest levels recorded since early 2002.
Just four other OPEC countries – Iran, Iraq, Kuwait, and UAE – pumped more crude than Saudi Arabia in January. The nation’s oil and refined product exports surged to 9,082 million bpd during this month. This is the highest level seen since December 2016, a month prior to the implementation of the measure.
By implementing these measures, the country intends to continue its diversification plan to reduce dependence on oil prices. In recent years, it has had to learn to live with a budget deficit exacerbated by low oil prices.