REUTERS
Saudi Arabia, the world's largest oil exporter, is storing record amounts of crude in its quest to maintain market share as it cut shipments, according to Bloomberg.
Commercial crude stockpiles in August rose to 326.6 million barrels, the highest since at least 2002, from 320.2 million barrels in July, according to data posted on the website of the Riyadh-based Joint Organisations Data Initiative. Exports dropped to 7 million barrels a day from 7.28 million, Bloomberg wrote.
"The fall in Saudi crude exports reflects the market reality," Mohammed Ramady, an independent London-based analyst, said Sunday by phone. "It's normal to see this fall knowing that the market is becoming highly competitive, with many countries in OPEC selling at discounts and under-pricing the Saudi crude."
Crude inventories have been at record highs since May, a month before Saudi Arabia's production hit an all-time high of 10.56 million barrels a day. The nation has led the Organization of Petroleum Exporting Countries in boosting production to defend market share, abandoning its previous role of cutting output to boost prices.
Brent crude oil prices have slid 12 percent this year as Saudi Arabia led the Organization of Petroleum Exporting Countries in boosting production to defend the group's market share amid a global supply glut. Brent futures for December settlement closed Friday at $50.46 a barrel in London, up 73 cents.
Saudi Arabia cut back oil production in August to 10.27 million barrels a day from 10.36 million in July, according to the JODI data. The kingdom told OPEC that it produced 10.23 million barrels daily in September. It pumped at an all-time high of 10.56 million barrels a day in June, exceeding a previous record from 1980.
"The rise in Saudi crude stocks is part of the market share strategy," Ramady said. "Saudi Arabia will not lower its production below 10.2 million barrels a day, so any extra crude is going to stocks. We've seen this trend for a couple of months now, and we expect it to continue as long as Riyadh wants to preserve its share in this highly competitive market."