Saudis to Cut Oil Deliveries to U.S. by 20%

Saudi Arabia will substantially cut oil deliveries to U.S. oil companies and other large customers next month in a reallocation of its exports, U.S. industry sources said today.

“They’re cutting back September liftings by 15% to 20% in order to reallocate their barrels,” said one source, who commented on condition he remain unidentified.

The source said he had been told that some of the reallocation would be sent to European refineries owned by Kuwait, which has been unable to export crude oil since the Aug. 2 occupation of its country by Iraq.

The United States and other industrialized nations had been looking to Saudi Arabia, the world’s largest exporter, to help make up for the 4 million barrels a day lost as a result of the U.N. embargo of oil from Iraq and Kuwait, ordered by the international body in the wake of the Iraqi invasion.

The sources could not give any reason for the Saudi action other than to perhaps help its beleaguered neighbor Kuwait by replacing the oil that would have normally gone to Kuwaiti refineries in Europe.

The U.S. companies that would apparently be immediately affected would be the members of the Saudi Aramco consortium--Exxon Corp., Mobil Corp., Texaco Inc. and Chevron Corp.

One source said daily Saudi production had declined about 400,000 barrels in late July to about 5 million barrels.

Production has since rebounded to the 5.4-million-barrel level, but exports have remained steady, the source said.