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China’s Sinopec, the largest oil refiner in Asia, will shut down its biggest refinery for a major overhaul starting May 1. This will coincide with a period in which Sinopec will have slashed its Saudi crude oil imports by 40 percent after the Saudis unexpectedly raised the official selling price of their flagship Arab Light crude oil for Asian customers.
Sinopec will close for around 40 days beginning May 1 its 460,000-bpd refinery and the whole ethylene complex of Zhenhai Refining and Chemical Company in the eastern coastal province of Zhejiang, one of China’s largest facilities that process Saudi crude oil, Reuters reported on Wednesday, citing an industry source briefed on the issue.
On Tuesday, an official at Sinopec’s trading arm Unipec told Reuters that it had requested 40 percent lower Saudi oil import loadings for the month of May and that the request had been approved.
Sinopec asked for lower Saudi oil imports earlier this week after Saudi Aramco unexpectedly raised last week the official selling price (OSP) of its flagship Arab Light crude grade to Asian customers for May loadings.
Aramco raised the OSP for Arab Light for Asia next month by $0.10 a barrel compared to April prices, to a premium of $1.20 to the Oman/Dubai Middle East benchmark, in a move seen as bullish by futures traders.
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Before Aramco’s May pricing became known, a Reuters survey of six refiners and traders showed that they expected Saudi Arabia to cut its OSPs for all its crude grades bound for Asia next month. Traders had expected the Arab Light crude price to be lowered by between $0.50 and $0.70—the lowest in six months—to reflect weaker Dubai crude prices.
Not only Sinopec is cutting Saudi crude oil imports for May. Two North Asian refineries also plan to cut Saudi oil volume nominations for May by 10 percent, sources at the two refineries told Reuters on Tuesday.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.