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BofA: Oil Demand Growth Has Peaked

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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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Saudi Arabia Boosts Oil Supply To Asia As Iran Sanctions Return

Saudi Arabia has the chance to regain Asian market share after at least three North Asian refiners have asked to receive extra supplies of Saudi oil for October as they are concerned that the returning U.S. sanctions on Iran will limit supply just as winter demand begins, Reuters reported on Tuesday, citing sources.

Saudi Arabia cut last week its official selling price (OSP) for its flagship Arab Light grade for October to Asia by US$0.10 a barrel to US$1.10 a barrel premium to the Dubai/Oman average.

The Saudi move was aimed at enticing more buyers in the month immediately preceding the return of the sanctions on its arch foe Iran, whose shipments to Asia have started to decline and are expected to further drop.

The Saudi oil is also currently competitive in Asia because of strong Brent Crude prices that are used for the pricing of supply from Europe and Africa to Asia. In addition, the U.S.-China trade war and the potential tariff on U.S. oil imports makes China’s smaller independent refiners shy away from American crude, according to a monthly survey for August by S&P Global Platts.

While Saudi Arabia is poised to boost supplies to Asia, Iran’s sales in the world’s fastest-growing oil-importing region have started to drop.

Iran’s key customers in Asia—no.1 China and no.2 India—are not expected to cut off their imports of Iranian oil, although India may reduce some of its Iranian intake as it tries to maneuver between cheap Iranian crude and the U.S. pressure to have Iran’s oil exports down to ‘zero’.

Related: OPEC Outages Are Driving Up Oil Prices

China has said that it would not stop buying Iranian oil, but Beijing is also said to have agreed not to increase its oil purchases from Iran.

Major Japanese refiners were said last week to have officially notified Iran that they would halt all imports of Iranian oil for October while they wait for the Japan-U.S. talks on Iranian oil imports to make a permanent decision on how to proceed in November.

U.S. ally South Korea did not import any Iranian oil in August, compared to 194,000 bpd imports from Iran in July, according to tanker-tracking and shipping data compiled by Bloomberg. South Korea says that it continues talks with the United States for a possible waiver.

By Tsvetana Paraskova for Oilprice.com

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