RIYADH—The world's top crude-oil exporter, Saudi Arabia, is
planning to pull back from record-high levels of production at the
end of the summer when domestic energy demand subsides, according
to people with knowledge of the matter.
The reduction could begin as soon as September and would amount
to about 200,000 to 300,000 barrels a day, bringing production to
about 10.3 million barrels a day, the people said. Saudi Arabia
told the Organization of the Petroleum Exporting Countries that it
produced 10.56 million barrels a day in June, a record high.
"It is purely based on the [domestic] demand situation," one of
the people said, adding that "production is likely to hover around"
10 million barrels until the end of the year.
Saudi Arabia—one of a handful of countries that generates
electricity by burning crude oil—generally reduces production in
the fall, when demand for the heavily subsidized energy to power
air conditioners cools off. But the upheaval in world energy
markets led some to believe this year would be different.
Challenged by oil prices down by half in the past year, the
kingdom, along with the Organization of the Petroleum Exporting
Countries, abandoned its traditional role of trying to prop up
prices with supply cuts. Instead, it has embarked on a production
tear, ramping up output to record levels to maintain its share of
the market.
The planned reduction likely wouldn't affect exports and
demonstrates that at least part of the kingdom's recent production
figures were related to its domestic-energy needs. Much of the
recent production went to Saudi Arabia's domestic refineries,
including the two 400,000 barrels a day refineries it recently
brought online with France's Total and China's Sinopec.
Saudi production figures are closely watched by oil investors as
an indicator of global supplies, as the kingdom produces more than
10% of the world's crude. Some experts have predicted the world's
top oil exporter would have to produce up to 11 million barrels a
day to meet demand for both exports and domestic needs.
But people with knowledge of the matter said 11 million barrels
was unlikely.
The country has the ability to produce 12.3 million barrels a
day for 90 days, but it has never pumped this much. Saudi output
averaged 9.22 million barrels a day from 2006 to 2014, according to
the U.S. Energy Information Administration.
Write to Summer Said at summer.said@wsj.com
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