FX.co ★ Saudi Arabia to decrease oil shipments to clients in Asia and Europe

The following its decision to cut an additional 1 million bpd in oil production, Saudi Arabia announced that it would decrease oil shipments to at least nine clients in Asia and Europe.

Bloomberg reported that the Kingdom has decided to reduce supplies by 20-30%, but this will only be for long-term supplies and for heavier Aramco grades.

In any case, some small clients in Europe may not receive Saudi shipments at all next month.

Last week, many were surprised with the decision of Saudi Arabia to further decrease its output, as well as on the price increase for clients in Asia and the United States.

The announcement came after OPEC agreed to raise production by 75,000 bpd in February, and by 120,000 bpd in March.

Saudi's proposal was aimed to offset these increases, as such will inevitably deliver negative impact on oil prices.

In fact, thanks to the additional cut, the cartel will produce less supply than it had in the second half of 2020. All in all, the total production cut in February will be 8.125 million bpd, while the decrease in March will be 8.05 million bpd. This is compared to the 7.7 million decline in the second half of 2020.

At the same time, the UAE warns that any attempt by oil producers to increase production this year will backfire. In particular, it will lead to a drop in prices.

Last week, oil quotes jumped because of Saudi Arabia's decision. It was also because of it that the International Energy Agency was able to declare that oil shale companies, whose production fell sharply last year, will be profitable again.