Saudi Arabia will ship lower-than-nominated crude oil volumes to some of its Chinese buyers in July, but will provide most other Asian customers with all the crude they have requested, Bloomberg reported on Friday, citing refinery officials in Asia.
Many buyers in Asia have asked for more Saudi crude oil for July as barrels from the Middle East are cheaper than those from the North Sea and the U.S. because of a drop in the Dubai/Oman benchmark compared Brent and WTI benchmarks. The oil going to Asia from the Middle East is priced off the Dubai/Oman benchmark.
The Saudis will not fully meet all Chinese requests but will supply all the volumes and even extra barrels to some customers in India, Japan, South Korea, and Thailand, Bloomberg’s sources say.
This past weekend, Saudi Arabia raised its official selling prices (OSPs) to Asia and Europe for July, as widely expected, signaling confidence in demand in the near term.
The increase in Saudi crude prices for next month was the biggest for Asian buyers, with the flagship Arab Light grade set to sell for $2.10 per barrel more than it did this month, at $6.50 a barrel over the Oman/Dubai benchmarks. Strong refining margins in Asia amid a global crunch in fuels also played a part in the Saudi decision to raise the prices for its oil selling in Asia.
Many of Saudi Arabia’s customers in Asia have asked for more Saudi supply as they prefer to steer clear of Russian cargoes.
China and India, however, continue to buy Russian oil, and India is even reportedly seeking more of it in order to take advantage of the cheap crude, which sells at record discounts. Currently, the flagship Russian grade Urals sells at a discount of $30 a barrel or more to Dated Brent.
By Tsvetana Paraskova for Oilprice.com
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