saudis supply asian buyers all the oil they asked for march
Last Updated : GMT 06:49:16
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Last Updated : GMT 06:49:16
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Saudis supply Asian buyers all the oil they asked for March

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Arab Today, arab today Saudis supply Asian buyers all the oil they asked for March

Saudi Arabian Oil Co
Singapore - Arab Today

Saudi Arabia is trying to make sure crude buyers in the world’s biggest oil market aren’t lured by rivals while it curbs output as promised.

Saudi Arabian Oil Co. will sell full volumes of contractual supply for March to Asian refiners, according to people with knowledge of the matter who asked not to be identified because the information is private. The state-owned producer, known as Saudi Aramco, gave at least one North Asian processor extra volumes of a light crude variety, an official at one of the buyers in the region said. 

As Middle East nations have cut output as part of a deal between global producers to ease a glut, it’s spurred the flow of rival supply to Asia from areas including the Atlantic Basin and US fields. That’s because regional benchmark Dubai crude has strengthened against other markers such as Europe’s Brent and America’s West Texas Intermediate (WTI). While Saudi Arabia is pumping less oil, it’s also trying not to give up sales to top consuming countries such as China, Japan and South Korea.

"When it comes to oil, the feast is in the East,” said John Driscoll, chief strategist at JTD Energy Services Pte, who has spent more than 30 years trading crude and petroleum in Singapore. "Historically, Asia has driven global energy demand growth and paid relatively higher premia for imports than the rest of the world. It remains the prize for Middle Eastern oil producers.”

At least seven North Asian refiners and two Southeast Asian processors received all of their contracted volumes for next month, according to the people. Saudi Aramco’s press office in Dhahran, Saudi Arabia, didn’t respond to an e-mail seeking comment.

The March volumes follow what have been relatively small cuts to Asia so far this year compared to other regions including the US and Europe. It was largely spared in January and February, with Saudi Aramco last month maintaining supplies to nations such as South Korea, Japan and Taiwan while curbing crude shipments to some customers in China and southern Asian countries.

The historical deal to trim output between the Organisation of Petroleum Exporting Countries (Opec) and 11 other nations took effect on January 1, with the producers seeking to trim output by about 1.8 million barrels a day during the first six months of 2017. The rising cost of Middle East crude has opened the window for arbitrage shipments such as Southern Green Canyon and Mars Blend from the Atlantic Basin to flow into Asia.

WTI’s cost fell below Dubai in December for the first time in at least three months. The US crude was at a 78 cent-a-barrel discount to the Middle East marker on Thursday. The premium of Brent, the benchmark for more than half the world’s oil, against Dubai narrowed to $1.27 a barrel last month, the least since September 2015.

Brent for April settlement was up 5 cents at $55.68 a barrel on the ICE Futures Europe exchange by 12:33pm Singapore time. US benchmark West Texas Intermediate for March delivery increased 7 cents to $53.07 on the New York Mercantile Exchange.

"As the price of Dubai strengthens relative to Brent and WTI, Middle Eastern producers face potential competition from the US Gulf coast, North Sea and Africa arbitrage flows to Asia,” Driscoll said. "It is very sensible and strategic for Middle Eastern producers to prioritize Asian markets, protecting their market share and maintaining sales volumes.”

Source :Times OF Oman

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