Russia's flagship crude grade, Urals, has seen higher demand from European refiners, with prices rising accordingly, since Saudi Arabia announced a surprise additional production cut at the start of this month.
Just two out of 48 Urals cargoes loading from Russia's Baltic ports this month are not sold yet, traders told Bloomberg on Monday.
The higher demand of Urals cargoes has resulted in a $1-a-barrel increase in the price of the grade in northwest Europe since Christmas, according to traders who spoke to Bloomberg. Urals went for a $0.70-a-barrel discount to Dated Brent on Friday, up by nearly $1 per barrel since touching an eight-month-low before Christmas.
In general, traders tell Bloomberg, the market has become busier since Saudi Arabia caught the market by surprise in the first week of January when it said after the end of the OPEC+ ministerial meeting that it would unilaterally cut 1 million bpd off its crude oil production for the next two months.
The Saudis also raised the official selling prices (OSPs) of their oil for Asia for February, lifting the price of the flagship Arab Light grade by $0.70 a barrel to a premium of $1 per barrel against the Middle East benchmark, the Oman/Dubai average.
The surprise Saudi announcement and the higher prices from the Kingdom have prompted Asian refiners to source oil from elsewhere, and North Sea cargoes seem to have benefited from the Saudi production cut.
Refiners in Asia are scrambling to secure supplies from Europe, with record purchases of North Sea cargoes in one day. According to Reuters, seven crude oil cargoes from the North Sea were bought and sold during a trading window on January 7 alone, and this, according to an oil trading source, was a daily record for North Sea cargoes traded in one day in recent history. Typically, one or two cargoes of 600,000 barrels of crude each are being traded on a normal day in normal circumstances, according to Reuters.
By Charles Kennedy for Oilprice.com
More Top Reads From Oilprice.com:
Charles is a writer for Oilprice.com More