Top oil exporter Saudi Arabia will meet most Asian customers’ requirements for May-loading crude after some buyers had asked for lower volumes partly because of refinery maintenance and higher prices, several trade sources said on Monday.
The demand for lower volumes comes just as the kingdom is set to phase out additional voluntary production cuts over the next few months under plans agreed by the Organization of the Petroleum Exporting Countries and their allies including Russia to ease supply cuts.
Reuters reported last week that four state Indian refiners had requested 36% less oil from Saudi Arabia in May than normal amid tensions between India, the world’s third-biggest oil importer and consumer, and the producer.
The producer met the four Indian refiners’ demands for lower volumes, but adjusted the types of crude it supplies to at least one of the Indian buyers to Arab Light from Arab Heavy, the sources said.
Some Japanese and Chinese refiners have also requested lower volumes, the sources told Reuters.
One of the Japanese refiners requested a 10% cut, which is within a permissible adjustment limit in the contract, while another won’t be lifting any Saudi crude because of refinery maintenance, two of the sources with knowledge of the matter said.
At least one Chinese refiner reduced the volume of May-loading Saudi oil it needed due to high official selling prices (OSPs) set by the producers, another of the sources said.
Saudi earlier this month raised prices for all grades it sells to Asia. The May OSP for flagship Arab Light crude rose to $1.8 a barrel above the Oman/Dubai average, the highest since February 2020.
State-owned energy giant Saudi Aramco notified customers of their May term supplies on Saturday.
Aramco on Monday declined to comment on its supply allocation or reductions requested by some of its customers.
Last month, Saudi Aramco cut the supply of April-loading crude to at least four north Asian buyers by up to 15%.
The Saudi oil supply cuts to Asia are not likely to have a major impact on Asia’s crude markets as supplies from other regions remain ample, the sources said.
Under plans by OPEC and its allies to ease supply cuts, Saudi plans to gradually ease its output cuts by 250,000 bpd in May, 350,000 bpd in June and 400,000 bpd in July.
Source: Reuters (Reporting by Shu Zhang and Florence Tan in Singapore, Nidhi Verma in New Delhi, Yuka Obayashi in Tokyo; Editing by Susan Fenton)