The Opec+ group's two-year phased output deal allocates Saudi Arabia a quota of 8.49mn b/d in May-July, rising to 8.99mn b/d for the rest of the year. Riyadh produced over 900,000 b/d below its quota last month, according to Argus estimates.
Additional Saudi output in August will be used for direct crude burn in power generation to help meet peak summer demand, according to a source familiar with the matter. Riyadh burned an average of 550,000 b/d of crude to generate power in June-October last year. Demand for power is at its highest during those months because of increased air-conditioning use.
Argus tracking shows that Saudi crude exports from the Ras Tanura, Ju'aymah and Yanbu terminals fell to just under 5.6mn b/d in June, marking an 11pc drop from May's 6.28mn b/d and a 39pc decline from the 9.22mn b/d exported in April, when Riyadh deployed its spare capacity in a short-lived battle for market share in the wake of the breakdown of the previous Opec+ output restraint agreement.
State-controlled Saudi Aramco has given full nominated volumes to some of its Asia-Pacific term crude buyers next month, while cutting allocations to at least one. Meanwhile, three European buyers said they asked Aramco for the minimal monthly volume allowed under their annual contracts, while a fourth requested no August-loading supplies at all. Aramco approved two other refiners for volumes below their nominations.