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Complying with the OPEC deal, Saudi Arabia has cut February term crude oil loadings to some buyers in India and Southeast Asia, but is shipping full delivery volumes to North Asia in order to protect its market share there, Reuters reported on Wednesday, quoting industry sources.
State-run oil company Saudi Aramco has cut term deliveries for February of mostly heavy crude oil to India’s Reliance Industries and Hindustan Mittal Energy Ltd (HMEL), and to Malaysia’s state-held oil company Petronas, Reuters’ sources said.
In OPEC’s deal from November 30, the cartel’s de facto leader and biggest producer, Saudi Arabia, pledged to cut 486,000 bpd as of January 1, lowering production to 10.058 million bpd.
Last week Saudi Aramco was said to be discussing with customers the possibility to cut February loadings by between 3 percent and 7 percent, with cuts to different buyers expected to vary.
Saudi Arabia, however, is keeping February volumes to North Asia unscathed as it is eager to preserve its market share on that important market. In addition, the Saudis receive higher netbacks on oil sales headed to the east than to other regions.
According to Reuters’ trade and industry sources, keeping North Asia sales untouched means that Saudi Arabia would continue cutting deliveries to Europe and the U.S., and some major oil companies in Europe and America could have February supplies reduced by up to 18 percent.
Related: Russia Has Started Cutting Oil Output: Kremlin
“Saudi Arabia and Kuwait are focusing their cuts on U.S. and European customers as they target excess inventories and protect market share in Asia,” Energy Aspects analyst Virendra Chauhan told Reuters.
According to an unnamed Singapore-based analyst with a European oil company, the Saudis would not cut supplies to Japan, South Korea and Taiwan.
“Southeast Asian demand is small when compared to North Asia,” the analyst noted, as quoted by Reuters.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing for news outlets such as iNVEZZ and…