Saudi Arabia does not have a specific oil production target and calibrates its output on a monthly basis: Khalid al-Falih
OREANDA-NEWS. Saudi Arabia does not have a specific oil production target and calibrates its output on a monthly basis to meet expected international and domestic demand for its crude, Saudi Arabia's oil minister Khalid al-Falih said in statements broadcast today by state-owned al-Arabiya TV.
"We in Saudi Arabia do not have a specific target number that we are pumping to achieve, nor do we load oil onto tankers and send it to markets in search of buyers," said al-Falih.
"The volume of Saudi oil production is determined each month after we have received demand for it several weeks in advance," said al-Falih. "Saudi Arabia's production is a response to demand from customers, whether they are our international customers outside Saudi Arabia, or domestic Saudi demand," he said.
Saudi Arabia's July output hit an all-time high of 10.67mn b/d. Al-Falih pointed out the country's new joint venture Yasref refinery with China's state-controlled Sinopec in Yanbu and its joint venture Satorp refinery with Total in Jubail – each with a capacity of 400,000 b/d, have boosted domestic demand for crude.
Another factor in lifting domestic Saudi demand for crude over the past three months is an increase in the direct crude burn during the peak air-conditioning demand season from the start of June until the end of September, although al-Falih made no mention of this.
Al-Falih said he was not concerned about "somewhat of an economic slowdown" in some markets, because demand in China "remains very healthy" and economic growth in India is "very good."
Roughly two-thirds of Saudi crude exports go to markets in the Asia-Pacific region.
In an indication that Saudi Arabia is unlikely to support an agreement by Opec producers and major non-Opec producers to freeze output to support prices, al-Falih said Saudi Arabia "will continue to adopt a flexible oil policy, and will respond to demand if it rises as it did this year and last year."
Saudi Arabia has stuck to its position that it will only consider freezing output if all other major producing countries agree to participate in such freeze. But Iran is sticking to its plans to boost its output to pre-sanctions levels first, while Iraq has recently called on foreign companies operating its largest fields to boost output.
It is therefore highly unlikely that major producers will reach an agreement to freeze output when they meet in Algiers at the end of September on the side-lines of the International Energy Forum.