Saudi output cut creates tight sour crude market

Move triggers flurry of Middle East-China trading with Unipec flooding market with Omani cargoes and rival Petrochina snapping them up

Ice Brent has traded in a narrow range of $73–77/bl since Saudi Arabia announced a 1mn bl/d voluntary output cut in June. While the crude flat price has flattered to deceive, the story remains different in the sour crude market, where differentials have rallied. The Dubai ‘window’—used to assess the tradeable value of spot crude loading from the Middle East—has seen one of its most active trading months ever. The reduction in Saudi volumes will bring production to a two-year low of 9mn bl/d when it takes effect in July. It is scheduled for one month only, but the Kingdom has reserved the option of extending it into August. Having already pledged a 500,000bl/d cut earlier this year, Saudi Ara