Saudi Arabian oil production surged to a record near 11 million barrels a day this month after the kingdom received stronger-than-usual demand from clients preparing for a disruption in Iranian supplies, according to industry executives who track Saudi output.
Riyadh has been pumping about 10.8 million to 10.9 million barrels a day of crude, the same executives said, asking not to be identified to protect their commercial relations with the kingdom. On some days, more than 11 million barrels a day were supplied to the market by drawing down domestic and overseas stockpiles.
Saudi Arabian oil officials declined to comment. The International Oil Daily, a trade publication, reported Saudi production numbers earlier today.
It’s unclear if Riyadh plans to sustain its elevated production and supply rates for the whole month, or output will taper off in the second half of November, lowering the monthly average.
The November surge will come into the spotlight when OPEC meets on December 6 in Vienna to discuss its 2019 production strategy. Riyadh has already indicated it supports a deep output cut and as a first step will reduce its shipments by 500,000 barrels a day in December from November.
Saudi Arabia told OPEC that it produced about 10.65 million barrels a day in October. The country’s oil minister, Khalid Al-Falih, said earlier this month that the kingdom would be producing more in November than October, but declined to provide an estimate.
“We have been increasing production in response to demand,” Al-Falih said in Abu Dhabi on Nov. 11.
Riyadh plans its production level about four to five weeks before the start of any given month as it receives requests from clients — “nominations” in the industry jargon. When the nominations for November were submitted, in the first week of October, the market was grappling with concerns of a large reduction in Iranian supplies, prompting buyers to request unusually large volumes.
At that point, the White House had threatened to cut the Islamic Republic’s oil exports to zero. A few weeks later the U.S. granted surprise waivers to buyers of Iranian crude including China, India, Japan and South Korea, easing supply fears.
The International Energy Agency said earlier this month that loadings of Saudi crude “in the early part of November appear to be higher still” than in the same period of October.
Saudi Arabia set an oil production record of 10.72 million barrels a day in November 2016 just before the kingdom led a group of OPEC and non-OPEC countries in cutting output. After the agreement, Riyadh slashed production dramatically over the next two months, with output dropping to 9.8 million barrels a day by January 2017.
The surge in Saudi output in early November means that the world’s top three oil producers — the U.S., Russia and Saudi Arabia itself — are now pumping at, or near, record levels. The leaders of the three nations will meet in Buenos Aires at the end of the month for the annual G20 summit, giving Donald Trump, Vladimir Putin and Mohammed bin Salman an opportunity to discuss energy markets a few days ahead of the OPEC meeting in Vienna.