Saudi Arabia has reportedly told crude buyers that it will begin trimming shipments next year as part of OPEC’s production deal.
A source told Bloomberg that state-owned Saudi Aramco has begun informing clients that it will be reducing crude supplies to comply with OPEC’S planned 1.2 million barrel per day production cut.
The production agreement is slated to be effective on January 1, 2017.
The majority of the supply declines will reportedly impact areas outside of Asia.
Several Asian crude buyers told Bloomberg that have been told that they will receive their normal volumes of crude under their long-term contracts in January.
According to Reuters, Saudi Arabia reduced its January price for Arab Light crude for Asian customers to a four month low in a bid to hold onto market share.
According to the U.S. Energy Information Administration, Asia received an estimated 68 perncet of Saudi Arabia’s crude oil exports as well as most of its refined petroleum products.
A note from PIRA Chairman Gary Ross seen by Bloomberg said that buyers of Saudi crude have been told that Saudi Arabia will cut output to slightly over 10 million barrels per day.
That figure represents about a 486,000 bpd output decline from current levels.
Ross added in the note that North America could see slightly larger supply cuts due to a larger oversupply compared to other regions.
OPEC members will meet with a group of 14 non-OPEC members this week, including Russia, to discuss potential production cuts.
OPEC secretary general Mohammed Barkindo told S&P Global Platts last week that he is “very confident” that non-OPEC producers will agree to cut production by 600,000 bpd.