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Petroleum industry

Oil Market Shifts: Shell Cuts Investment, Iraq Increases Exports, and Saudi Arabia Updates Pricing Strategy

Strategic Insights

— 2 min read

Iraq exported 2.38mn b/d in the first four weeks of October, the highest so far in phase 8 of oil-for-aid, while Shell cut its capital spending by a quarter to $5.3bn in the first nine months of 2000. Meanwhile, Saudi Arabia's Aramco is set to meet potential buyers to discuss 2001 distillate supplies, with gasoil likely to be sold at a $1/bl premium to Mideast Gulf quotes and jet at an 80 [cts.]/bl premium. Additionally, Saudi Arabia is increasing its crude exports to China's Sinopec, with a 100% increase in imports expected from 2001.

Key Takeaways:

  • Shell's capital spending was cut by a quarter to $5.3bn in the first nine months of 2000, despite a near doubling of cash flow.
  • Iraq's oil exports rose to 2.38mn b/d in the first four weeks of October, the highest in phase 8 of oil-for-aid.
  • Saudi Arabia's Aramco plans to meet potential buyers to discuss 2001 distillate supplies, with gasoil likely to be sold at a $1/bl premium to Mideast Gulf quotes and jet at an 80 [cts.]/bl premium.
  • Saudi Arabia is set to increase crude exports to China's Sinopec, with a 100% increase in imports expected from 2001.
  • Venezuela has signed a new deal with Cuba to sell 53,000 b/d of crude at preferential terms, including financing up to 25pc of the sale price at 2pc interest over 15 years.
  • Formosa Petrochemicals, Taiwan's 450,000 b/d refiner, has started buying Mideast Gulf sour crude as it tests its desulphurisation capacity.
  • Oman's oil production problems have led to a 25,000 b/d output drop in its northern fields, with officials estimating it will take six months to bring output back to the usual 900,000 b/d.

Statistics:

  • Shell's capital spending was cut by 25% to $5.3bn in the first nine months of 2000.
  • Iraq's oil exports rose to 2.38mn b/d in the first four weeks of October.
  • Saudi Arabia's Aramco plans to sell gasoil at a $1/bl premium to Mideast Gulf quotes and jet at an 80 [cts.]/bl premium.
  • Saudi Arabia is set to increase crude exports to China's Sinopec by 100% from 2001.
  • Venezuela has signed 11 deals to sell oil to Caribbean and Central American nations on preferential terms, including a new deal with Cuba.
  • Formosa Petrochemicals has started buying Mideast Gulf sour crude, with a focus on Gulf crude for the next two to three months.
  • Oman's oil production problems have led to a 25,000 b/d output drop in its northern fields.

Sources:

  • Shell's quarterly report for Q3 2000
  • Iraq's oil-for-aid phase 8 statistics
  • Saudi Arabia's Aramco press release on distillate supplies
  • Venezuela's agreement with Cuba on oil exports
  • Formosa Petrochemicals' press release on crude purchases
  • Oman's oil production statistics
  • U.S. oil swaps and futures regulation bill proposal
  • Other news articles and industry reports.

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