RIYADH — Saudi Arabia's crude oil exports rose 7.8 percent in January to the highest level in 11 months, according to the Joint Organizations Data Initiative (JODI). The world's biggest oil exporter shipped 7.47 million barrels a day in the month compared with 6.93 million in December, data posted Wednesday on the initiative's website showed. Shipments increased to the highest since February 2014, the data showed. The Kingdom produced 9.68 million barrels a day of crude in January, up 0.5 percent or 50,000 barrels a day, from the previous month, according to JODI. Saudi Arabia is the largest producer in the Organization of Petroleum Exporting Countries. The growth in January exports coincided with a 7.6 percent slide in the Brent crude price that month, signaling that cheaper oil may be stimulating demand amid a global surplus. Consumption is rising gradually, and economic growth is more robust, Saudi Oil Minister Ali Al-Naimi said March 4 in Berlin. The International Energy Agency, an adviser to industrialized nations, increased its forecasts for global oil consumption in 2015 by 130,000 barrels a day because of “modestly escalating global economic growth,” it said in a March 13 report. Saudi Arabia reduced the amount of crude it burned as fuel in power plants in January to 276,000 barrels a day from 386,000 in December, according to JODI data. The country burned less crude in January than in any month since March 2011. OPEC's second-biggest producer, Iraq, exported 14 percent less oil in January at 2.54 million barrels a day, while Iran's shipments were little changed from December at 1.33 million, the data showed. Kuwait, the third-largest producer in OPEC, exported 2.03 million barrels a day, some 20,000 more than in December, according to JODI. US production and stockpiles continue to rise from the highest level in three decades, even after last year's price decline of almost 50 percent. OPEC, which decided in November to keep output unchanged, has pumped more than its daily production target of 30 million barrels for nine months. Brent, a benchmark for more than half of the world's oil, slid as much as 70 cents, or 1.3 percent, on Wednesday to $52.81 a barrel on the London-based ICE Futures Europe exchange. Meanwhile, Saudi Arabia is investing heavily in its downstream business and developing captive markets to enter global oil market domination and counter the threat of US tight oil. Saudi Arabia has been crafting the strategy for a few years, but it has come in sharp focus after the kingdom convinced other OPEC producers to maintain oil production at a meeting last November despite a collapse in crude prices. Oil prices have fallen 50% since June 2014, but Saudi officials have been unmoved as they see their strategy working. That suggests that the country has effectively handed over the role of swing producer to more expensive non-OPEC producers and made a real play to capture more market share. "The intention to grow market share and move away from its role as swing supplier increases the likelihood of Saudi Arabia ramping up its petroleum supplies going into H2 2015 by 0.5 to 1 mb/d and 2016, in our view," said Miswin Mahesh, analyst at Barclays Capital. "By building local refineries and increasing stakes in refineries globally (South Korea, China, US), Saudi Arabia has a growing captive market for its crude. It is uniquely positioned relative to other oil producers in a highly competitive market." Saudi Arabia is an equal partner with Royal Dutch Shell in Motiva refinery, the United States' largest refinery. The investment has helped Riyadh maintain its market share - in percentage terms - in the United States, even as other OPEC producers such as Algeria and Nigeria have seen their market share drop on the US Gulf Coast. The International Energy Agency predicts the Middle East will establish itself as a major downstream player, with Saudi Arabia leading the way. "Saudi Arabia is on track to join the club of major oil-product exporters following the completion of two grassroots refineries within the kingdom and the start of a new product trading company, Saudi Aramco Product Trading Company, in 2012," the IEA said in its latest medium-term outlook report. — SG
