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Falih ... swings are not unusual

Falih ... swings are not unusual

Saudi Arabia pushes for at least $70 oil

DUBAI-LONDON

Budget needs are forcing Saudi Arabia to push for oil prices of at least $70 per barrel this year, industry sources say, even though US shale oil producers could benefit and Riyadh’s share of global crude markets might be further eroded.

Riyadh, Opec’s de facto leader, said it was steeply cutting exports to its main customers in March and April despite refiners asking for more of its oil. The move defies US President Donald Trump’s demands for Opec to help reduce prices while he toughens sanctions on oil producers Iran and Venezuela.

The export cuts are designed to prop up prices, sources close to Saudi oil policy say. Saudi officials say the kingdom’s output policies are merely intended to balance the world market and reduce high inventories.

"The Saudis want oil at $70 at least and are not worried about too much shale oil," said one industry source familiar with Saudi oil policy.

Another source said Saudi Arabia wanted to "put a floor under oil prices" at $70 or slightly lower, and added: "No one at Opec can talk about output increases now."

Officially, Saudi Arabia, which plans to raise government spending to boost economic growth, does not have a price target. It says price levels are determined by the market and that it is merely targeting a balance of global supply and demand.

Even a price of around $70 a barrel would not balance Saudi Arabia’s books this year, according to figures cited by Jihad Azour, director of the International Monetary Fund’s Middle East and Central Asia department in February. For that, he said, Riyadh needs oil prices at $80-$85 a barrel.

Saudi Arabia, the world’s largest oil exporter, also wants to make sure it avoids a repeat of the 2014-2016 oil price crash below $30 per barrel, sources familiar with Saudi policy said.

Saudi Arabia plans to reduce March and April oil production to under 10 million barrels per day—below its official Opec output target of 10.3 mbpd.

A Saudi official told Reuters this month that despite strong demand from customers, state oil giant Saudi Aramco had cut its allocations for April by 635,000 bpd below nominations—requests made by refiners and clients for crude.

Saudi Energy Minister Khalid al-Falih said such swings were not unusual because last year the kingdom had raised output and exports above targets to avoid imminent shortages.






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