Saudi Oil Cut Starts to Weigh on Global Medium, Heavy Sour Grades Supply

Saudi Arabia’s crude oil output cut for July and August is starting to change the supply landscape in global crude markets according to RBC and FGE.

• “Mediums and heavy sour barrels are becoming increasingly scarce given OPEC+ cuts,” said Michael Tran, managing director at RBC Capital Markets LLC.
• “Much of the physical looseness in the market has stemmed from lighter, sweeter barrels and sneaky surging US shale production has been under-appreciated, ” Tran added.
• “The OPEC+ cuts have meant a drop in medium-sour crude supply compared to a growth in light-sweet crude output,” said James Davis, director of short-term oil service at FGE.
• “For lighter crudes, which typically yield high levels of naphtha, the weak naphtha cracks are also going to be having a negative impact,” Davis said.