NEW YORK (Dow Jones)--Saudi Arabia is cutting oil exports to some of its biggest global refining customers, but not in the U.S., an independent U.S. refiner said Monday.
"There are Saudi cutbacks, but it did not affect us," a person familiar with the refiner's crude purchasing said. "It affected some of their big global customers."
Some of these large customers may have refineries in the U.S., but are only seeing supplies cut to assets outside the country, the person said.
Traders with a second independent U.S. refiner and a U.S.-based producer and refiner also said that their Saudi crude volumes are unchanged.
Earlier this year, Saudi Arabia raised production by about half a million barrels a day. The Organization of Petroleum Exporting Countries met in September and agreed to reduce production to the official quota. Saudi Arabian officials said the kingdom, the world's biggest crude exporter, would only cut output if market conditions warranted.
As oil prices fell to nearly $90 a barrel last week, market participants speculated that the Saudis could cut exports to prevent prices from falling further. Oil futures recently traded at $109.54 a barrel, up $4.99.
The U.S. is often the last to feel the impact of a cut in Saudi production as refiners rarely purchase the full amount they are allocated each month. The unused barrels from the U.S. allocation are sold in the spot market or sent to refiners in Europe or Asia. This system gives the Saudis flexibility to "cut" exports to the U.S. without punishing customers.
U.S. demand for Saudi crude was likely even lower this month, as Hurricane Gustav and Hurricane Ike forced refineries in Texas and Louisiana to shut down, for weeks in some cases. Refineries in those two states accept nearly two-thirds of Saudi oil sold to the U.S., according to the U.S. Energy Information Administration.
Source: Brian Baskin, Dow Jones Newswires; 201-938-2062; brian.baskin@dowjones.com