Saudi Arabia opens the oil taps, ups June output to record high

Saudi Arabia ramped up its crude production to a record high in June, reaffirming its strategy of defending market share and feeding a rise in global as well as domestic demand.

The world’s top oil exporter said it pumped 10.56 million barrels per day (bpd) of oil last month, up 231,000 bpd from May, according to official figures released by OPEC on Monday.

Saudi Arabia has been increasing its production steadily in the past few months. The June data eclipsed recent peaks, according to records going back to the early 1980s.

The output boost highlighted Saudi Arabia’s determination to defend market share against higher-cost producers, such as U.S. shale drillers, and other competing supply sources.

Poorer members of the Organization of the Petroleum Exporting Countries have called for production cuts to shore up oil prices, which are down about 50 percent since June 2014.

The rise in production also underlines strong growth in global demand and an increase in crude supplies to local refineries and power plants during summer, when air-conditioning usage soars and as the kingdom ships more oil products.

For example, the amount of crude burnt to generate power last year rose from around 350,000 bpd in March to nearly 830,000 bpd in June, according to the Joint Oil Data Initiative (JODI).

Local refineries processed 1.852 million bpd in April 2014 but by the same month this year that had risen to 2.224 million bpd, figures from JODI, an international body set up to promote oil-market transparency, show.

Moreover, Yanbu Aramco Sinopec Refining Co (Yasref), a local joint venture between Saudi Aramco and China Petrochemical Corp (Sinopec), reached its full processing capacity of 400,000 bpd in late June.

OPEC heavyweight Saudi Arabia exported 7.737 million bpd in April, the latest month for which such data is available. That was down slightly from 7.898 million bpd in March, the highest level in almost a decade.

Oil minister Ali al-Naimi has said Saudi Arabia’s output is likely to remain around 10 million bpd, and that he was “very positive” about the outlook for Asian oil demand.

Naimi also said he expects oil demand to pick up in the second half of 2015 while supply decreases.

OPEC said on Monday it expected demand for its own crude to rise by 860,000 bpd in 2016 to 30.07 million bpd. But it cut its estimate of demand for its crude this year by 100,000 bpd to 29.21 million bpd.