Photographer: Dana Smillie / Bloomberg
Photographer: Dana Smillie / Bloomberg
Saudi Arabia cut off crude oil supplies to at least nine refiners in Asia and Europe after the country went voluntary production by 1 million barrels per day for February and March.
Aramco will supply less crude as part of long-term contracts next month, giving some Asian processors as much as 20% -30% less than they demanded, according to company officials who received the calls but requested not to be marked as the private information. A European refiner who usually buys small quantities from Saudi Arabia will not receive any goods for February.
Supply cuts were aimed at heavier levels such as Arab Medium and Arab Heavy, officials said. State-owned Aramco declined to comment when notified of the matter.
Saudi Arabia’s move to sell less oil comes amid an overall decline in crude demand across Asia due to the peak brewing maintenance season from March to April. Separately, the recovery of Covid-19 diseases across Asia and Europe, and the emergence of a state of emergency in parts of Japan and Malaysia are also reducing fuel consumption and keeping seed run rates at low levels.
See also: Oil refinery reel from Saudi produce cut even as demand rises
Five other Asian processors were looking for less crude for February and got the quantities they asked for, an official said. Aramco it grabbed its official selling prices for all sales to Asia and the US last week after its shocking news of deep cuts implemented for the month.
Across Asia, refineries had been eagerly awaiting Aramco to release so-called quotas in February amid tighter supply expectations. Saudi Arabia’s size of promising loops was larger than the market expected, topping Abu Dhabi move to cut Asian term sizes for key levels 20% next month.
Despite lower crude demand due to maintenance closures across Asia and narrow margins, regional processors hit by supply cuts may be looking for fast spot loads – some loads are still available from last month – to make up for deficits. Other options include Russian short barrels such as ESPO and Sokol for loading in March arriving in North Asia in less than a week.
– Supported by Sherry Su, and Tsuyoshi Inajima