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Jakarta Post

Saudi Arabia, OPEC resilience put to test

  • Mriganka Jaipuriyar
    Mriganka Jaipuriyar

    Associate editorial director, Asia & Middle East Oil News & Analysis, S&P Global Platts

PREMIUM
Singapore   /   Fri, March 22, 2019   /  12:42 pm
Saudi Arabia, OPEC resilience put to test An oil tanker is seen at the Jose refinery cargo terminal in Venezuela. Oil rose to around US$67 a barrel on Tuesday, supported by Saudi Arabia’s plan for further voluntary supply curbs in April and a cut in oil exports from Venezuela due to a power outage. (Reuters/Jorge Silva)

Saudi Arabia and its Organization of Petroleum Exporting Countries (OPEC) allies face a test of their resilience when they meet next month. On the one hand, restricting output has boosted prices, but on the other hand their strategy has stoked production outside the group. The kingdom’s insistence on rigid output discipline isn’t without risk in Asia. Riyadh has so far maintained its market share in the region, despite its self-enforced production cuts. For instance, supplies to China in January rose 34 percent year on year to 1.4 million barrel per day (bpd), official government data showed. But, an open arbitrage to Asia for the United States, North Sea and West African crudes, and the possibility of global demand growth picking up momentum increasingly threatens the kingdom’s carefully crafted strategy. For now, Saudi is sticking to its game plan. The kingdo...

Disclaimer: The opinions expressed in this article are those of the author and do not reflect the official stance of The Jakarta Post.