Saudi Arabia’s oil exports plummeted in the last month of 2018, reassuring oil markets that OPEC’s de facto leader may have enough fortitude to carry the water of the cartel in lowering global oil inventories.
The Kingdom’s oil exports in December fell by 500,000 barrels per day in December, according to tanker tracker data compiled by Bloomberg, with most of the decrease coming off China and the United States, the latter which has the most-watched oil inventories in the world. The United Arab Emirates also showed fewer oil exports in December.
Data from S&P Global Platts’ cFlow software estimated that Saudi’s oil exports fell to 7.523 million bpd in December, down from 8.162 million barrels per day in November.
Oil prices plunged in the last month of the year as the market viewed with skepticism OPEC’s agreement with non-OPEC allies to reduce oil production by 1.2 million barrels per day, with OPEC responsible for 800,000 bpd of that 1.2 million.
UAE’s oil minister Suhail al-Mazrouei reassured oil markets on Wednesday that OPEC’s production cuts should balance the market sometime in Q1 2019, and indicated that OPEC may even cut deeper if the market should fail to respond.
The markets were indeed responding favorably by mid-afternoon, with oil prices rallying on the news of OPEC’s reduced oil exports. WTI climbed almost 3% in afternoon trading to reach $46.74 barrel, while Brent increased 2.6% to trade at $55.20 per barrel.
Oil prices have been unable to rally for any extended period of time in the last few months of 2018, with U.S. oil production and corresponding inventories posing a worthy challenger for its OPEC adversary. Oil production rose to 11.7 million bpd according to the Energy Information Administration (EIA) as of 12/21/2018—the last week for which there is data.