Saudi Arabia’s oil giant Aramco will be sending 4 million barrels per day (bpd) of its crude to Asia in May, down from the full contractual volumes of 6 million bpd, a Saudi source with knowledge of Aramco’s plans told Reuters on Friday.
“The full contractual volumes to Asia are about 6 million bpd. What Aramco has allocated is what was nominated, which is around 4 million bpd,” the Saudi source told Reuters.
Earlier on Friday, other sources in Saudi Arabia had told Reuters that Saudi Aramco would be sending the full 6 million bpd contractual volumes to its customers in Asia.
The lower allocations, due to the nominations of around 4 million bpd, as per the Saudi source, suggest, on the one hand, that Saudi Arabia is lowering its oil supply to the market in line with its commitment to the new OPEC+ deal. On the other hand, the lower nominations from Asian customers suggest that despite the deep discounts of Saudi crude to Asia, demand for crude is still lower than the usual volumes.
At the beginning of this week, Aramco announced the pricing for its oil for May, offering deeper discounts for customers in Asia for the second month in a row, despite Sunday’s historic global production cut deal—a sign that the Kingdom continues to fight for market share in Asia even after the formal end to the price war.
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Under the new OPEC+ agreement, Saudi Arabia has pledged to reduce its oil supply to the market to 8.5 million bpd in May and June from a baseline of 11 million bpd.
The market and analysts, however, see the new deal as ‘too little too late’ to make a meaningful impact on growing global inventories amid crashing demand.
On Thursday, the energy ministers of Saudi Arabia and Russia, Prince Abdulaziz bin Salman and Alexander Novak, respectively, held a phone conversation and issued a statement, via the Saudi Press Agency, that “Both our nations are strongly committed to implement the agreed target cuts over the next two years and will continue to closely monitor the oil market and are prepared to take further measures jointly with OPEC+ and other producers if these are deemed necessary.”
By Tsvetana Paraskova for Oilprice.com
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