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Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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Asia Is Not Rushing To Buy Extra Crude Oil From Saudi Arabia

  • Refiners in the world’s largest oil-importing region have not asked for additional supply from the world’s largest oil exporter, Saudi Arabia
  • Earlier this month, Saudi Arabia raised its official selling price for its flagship Arab Light crude
  • Asian refiners typically ask for additional Saudi crude in case of strong demand and relatively low official selling prices

Higher Saudi prices for January, lower overall demand for crude amid the Omicron uncertainty, the Chinese crackdown on illicit practices at its independent refiners, and refinery maintenance season starting in late Q1 2022 have resulted in Asian refiners abstaining from extra Saudi crude supply for loading in January.

Refiners in the world’s largest oil-importing region have not asked for additional supply from the world’s largest oil exporter, Saudi Arabia, above the term supplies under the long-term contracts, company officials have told Bloomberg.

At least three refiners in Asia will not be seeking extra Saudi crude for January loading, the unnamed officials told Bloomberg.

Asian refiners typically ask for additional Saudi crude in case of strong demand and relatively low official selling prices (OSPs) of the Saudi grades to the region.

Earlier this month, however, Saudi Arabia raised its official selling price for its flagship Arab Light crude to a nearly two-year high premium over the Oman/Dubai benchmark, signaling confidence in Asian demand despite the still high uncertainty about the Omicron variant of COVID.

Arab Light will next month sell for $0.60 more per barrel than it does this month for buyers in Asia. That’s $3.30 a barrel more than the Oman/Dubai benchmark, off which Middle Eastern crude going to Asia is priced. The premium over Oman/Dubai is the highest for Arab Light since early 2020—the months before the pandemic struck.

Apart from the higher Saudi prices, Asian refiners are not rushing to buy crude above the volumes in their term supply deals, due to low refining margins for fuels after the peak winter demand in March, when cargoes loading in January are set to arrive in Asia.

In addition, China’s independent refiners, commonly known as teapots, will likely see lower purchases in coming weeks as the local government is investigating practices at the refineries in the Shandong province, traders told Bloomberg.

Omicron is also weighing on the market, with trading quieted in recent days in Asia, a seller of West African crude told Reuters earlier this week.                 

By Tsvetana Paraskova for Oilprice.com

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  • Mamdouh Salameh on December 09 2021 said:
    If Asia isn’t asking for additional supplies of Saudi crude oil now, they will soon be begging Saudi Arabia to supply more.

    As a result of the pandemic and excessive pressure on the global oil industry to keep oil underground, global investments in oil and gas have declined considerably. This means that the global oil market could face a widening deficit between supply and demand by the end of 2022 or early 2023 estimated at 5-7 million barrels a day (mbd) pushing oil prices beyond $100 a barrel.

    Asian countries should remember the heavy prices they paid for their energy needs during the recent energy crisis.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London
  • George Doolittle on December 10 2021 said:
    "because we don't have 80 us dollars that's why!"

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