RIYADH – Saudi Arabia cut its oil output in December because of lower seasonal demand, a senior Saudi oil ministry advisor told the state news agency Monday, rejecting media reports suggesting the move was aimed at pushing up crude prices. Saudi Arabia cut its crude oil production by around 700,000 barrels per day (bpd) over the last two months of 2012, with output falling to around 9 million bpd in December. Saudi oil ministry adviser Ibrahim Al-Muhanna said in a statement that the reduction in Saudi production late last year was due to lower demand for oil both at home and abroad. “Saudi Arabia's production fluctuates month-to-month, and depends on a range of domestic, regional and international factors. At this point in time, production is driven by customer requirements, not by price levels. It is the market which sets the price of oil,” he said. “One driver of Saudi Arabia's production fluctuation is domestic demand, and this depends on seasonality. Peak demand was in the summer, but it has weakened over the last quarter, as usual. Another factor, equally important, is international customers' demand for Saudi oil. This is also seasonal,” he said. “If we look at the last quarter of 2012, for example, there were many challenges in terms of domestic growth in the eurozone and concerns about the US fiscal cliff. This, consequently, impacted the demand for oil.” Muhanna said media reports accusing Saudi Arabia of deliberately trying to push oil prices by cutting production were “categorically wrong.” He said Saudi Arabia was optimistic that economic uncertainty would pass and that economic growth would return in 2013. “Saudi Arabia stands ready to respond to these changes, and again will meet all customers' needs. Saudi Arabia remains strongly committed to a stable oil market,” he said. Meanwhile, a report issued by KFH-Research expected the average price for west Texas crude oil to reach $88 per barrel, while Brent average price will reach $100 per barrel in 2013, due to growing demand from transportation sectors in developing countries. The report expected the global demand to continue to rise, even slightly by 0.8 million barrels per day. The report noted that most of the increase in demand will come from China by 3.6 percent on yearly basis, Middle East 2.3 percent, and Latin America 2.3 percent. 2012 showed that the demand for oil will remain strong, especially in emerging markets like China, India, Russia, Brazil, and South Africa. the supply coming from OPEC countries will drop by 500,000 barrels per day in 2013, after increasing by 1.2 million barrels per day in 2012, the report said. – SG/Agencies
