Saudi Arabia Began Cut Output

Top oil exporter Saudi Arabia began to implement OPEC's first output curbs in over two years by telling its core Asian customers it would cut their supplies by up to 8 percent next month, industry sources said on Monday.

Oil prices retraced some losses on Monday's news, but remained below $60 a barrel and at near their lowest this year on doubts over whether other producers would follow through.

"Our company received notification from Saudi Arabia at the weekend," one source at a Japanese refiner said. The refiners will receive about 92-93 percent of the volume they agreed to buy under annual contracts with state oil firm Saudi Aramco.

Unipec, the trading arm of top Asian refiner Sinopec, which is Saudi Arabia's largest independent customer in Asia, will see a 7-8 percent cut to its supplies, a trade source said. Unipec lifts about 90 percent of China's 500,000 bpd of Saudi imports.

Aramco typically applies output cuts evenly to most of its Asian customers, who lift about 3.5 million barrels per day (bpd), or half of the kingdom's exports. An 8 percent cut to the region would remove some 280,000 bpd from the market.

Oil majors with global contracts had said in mid-October that their supplies would be cut by about 5 percent next month, but they appeared to have been alone in the curbs. It was not immediately clear whether oil majors received deeper cuts.