Saudi Aramco, the Saudi oil giant, will cut shipments of crude oil to international customers by 520,000 barrels a day (b/d) in September, an industry source told Reuters.
Supplies to Asia could be cut by up to 10%, industry sources told CNBC.
“The Saudi decision to take an ax to its Asian crude allocations shows it means business (and) gives credence to its pledge to do ‘whatever it takes’ to normalize bulging global oil inventories,” Stephen Brennock, an analyst at PVM, noted to CNBC.
The news comes as Saudi Arabia meets with other oil-producing and OPEC nations in Abu Dhabi to discuss non-compliance with their 2017 agreement to cut oil production. The original agreement called for production cuts of 1.8 b/d to draw down global supply and boost prices.
Despite the agreement, July’s OPEC production rose to a new high for 2017, Reuters reports.
Production has also been on the upswing in the US, Libya, and Nigeria, three countries unbound by the production-cut agreement, notes the head of commodity strategy at Saxo Bank, Ole Hansen, according to Reuters. This rising production has hampered OPEC efforts to raise prices.