Saudi Arabia will export full crude oil volumes to at least four Asian clients next month, Reuters has reported, citing unnamed sources familiar with the situation.
Saudi Aramco and its Asian buyers use standard contracts, under which either side can trim or boost orders by a margin of 10 percent above or below the originally stipulated amounts depending on demand and supply.
Earlier this year, Aramco angered the Indian government after it said it will raise prices for crude oil shipments for Asian buyers as it continued to keep a heavy cap on its oil production. India responded with an order to state-owned refiners to buy crude oil from other suppliers. Later, Aramco reduced its official selling price for Asian buyers for June shipments. This was the first price reduction for Saudi crude in six months.
According to Reuters sources, however, some buyers from Asia have refused to increase their volumes for June and preferred to buy other crude grades similar to Saudi Arabia’s Arab Light on the spot market, where prices were lower. Besides price considerations, a slowdown in fuel demand growth in China and India has also weighed on buyers’ appetite.
Saudi Arabia was among the hardest hit by the pandemic in terms of oil revenues. But it has since recovered thanks to higher oil prices, with Aramco reporting a 30-percent jump in net profits for the first quarter.
Despite the improvement in prices, the Saudi state energy company has been looking for ways to shore up its finances amid the prolonged depression in oil prices despite the rally in recent months after it booked a 50-percent slump in net profits for 2020.
Steps taken so far have included debt issuance, a 49-percent stake sale in its pipeline business to a consortium led by EIG Global Energy Partners for $12.4 billion, and plans to sell stakes in non-strategic oilfields.
By Charles Kennedy for Oilprice.com
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