Saudi Arabia’s crude production went up six per cent in Q2 2015, year-on-year (YoY), to 10.3mn bpd
This rise in production is attributed to increasing domestic demand and a desire to hold on to market share, according to a report from Jadwa Investment.
The domestic crude consumption is also expected to reach three million bpd in Q3 2015 as demand will peak in the summer months.
“In the last three years, quarter-on-quarter growth in Q3 has averaged 250,000 bpd and we expect to see a similar quarterly rise in total crude consumption this year as well,” said Jadwa economists.
Jadwa Investment’s Quarterly Oil Market Update also stated that Brent prices were up 13 per cent, quarter-on-quarter, in Q2 2015 to US$61 per barrel.
“Previously, we expected a pick-up in global oil demand in second half of 2015 to move global oil balances into a deficit by Q4 2015. Although we still expect a pick-up in global economic activity, year-on-year increases from OPEC and non-OPEC sources, such as Russia, will result in global oil balances remaining in surplus throughout 2015,” added the Jadwa research team.
Lower oil prices have put intense fiscal pressure on a number of OPEC and non-OPEC producers, although the risks for Saudi Arabia are lower, due to ample foreign reserves and low debt levels.
Meanwhile, crude exports from Saudi Arabia will remain at around seven million bpd in 2015.
The Jadwa report also stated that growth in oil demand from non-Organisation for Economic Co-operation and Development (OECD) countries continues to be the main component of global oil demand growth.
According to OPEC data, around 95 per cent of the total Q2 2015 (YoY) global demand growth, of 1.2mn bpd, was supported by non-OECD countries.
Non-OECD demand is forecast to grow by 1.1mn bpd in 2015 (YoY) with the largest increases coming from China (up three per cent), India (up 2.9 per cent) and the Middle East (up 2.7 per cent).
Total oil output from OPEC was estimated to be up by three per cent in Q2 2015 YoY as a result of large increases from Saudi Arabia, Angola, Libya and the UAE.
