Saudi Arabia unlikely to raise crude output for 3 years: BMI

Saudi Arabia is unlikely to substantially increase oil output over the next two to three years unless a larger-than-expected deficit builds in global oil markets, BMI Research said in a recent report.

It added that the Kingdom has over-complied with its crude oil production targets set in agreement with OPEC and non-members to stabilise global oil markets.

The Kingdom produced an average of 9.949 million barrels per day (bpd) in 2017 against a production target of 10.058 million bpd. Crude oil exports have been much steadier, averaging 6.967 million bpd in 2017, a full 680,000 bpd lower than in 2016.

"Accordingly, crude oil exports will likely remain relatively stable. Products exports will continue to accelerate, as the outlook for global fuels demand continues to look strong, against a softer consumption trajectory in Saudi Arabia," the report said.

However, refined product exports have been on the rise, driven by strong utilization rates at new mega-refineries.

The 2015 start-up of the Yanbu facility increased refined product exports in 2016 and 2017 by around 300,000 bpd and 100,000 bpd, respectively. Total exports averaged 1.439 million bpd, the report noted.

"We expect this trend to continue into 2018 and 2019 given expectations of strong compliance with the OPEC deal over 2018 and continued cooperation in 2019, alongside the start-up of another 400,000 bpd refinery at Jizan," BMI said.

The first unit of the Jizan refinery was completed at the end of 2017 and start-up of the new facility is expected in mid-2018, reaching full capacity by early 2019.

"We believe distillate exports will continue to rise, especially as IMO regulations from 2020 force a switch to low-sulphur fuels in the shipping," the consultancy said.