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European Commission Downgrades Growth Forecast for 2024

European Commission Downgrades Growth Forecast for 2024

The European Commission downgraded its…

UAE To Ship Lower Oil Volumes To Asia This Month

The United Arab Emirates' ADNOC has informed Asian buyers of crude it would ship 5% lower volumes to them this month, possibly as a result of the additional OPEC+ production cuts announced last month.

For June and July, however, ADNOC told buyers it would supply full volumes, Reuters reported, citing unnamed sources familiar with developments.

One source, however, noted that "We may see less loading from ADNOC from May onwards."

The additional production cut of 1.16 million bpd was agreed to stay in effect until the end of the year.

OPEC+ agreed to reduce combined oil production by an additional 1.16 million barrels daily last month, arguing it aimed at stabilizing the oil market rather than scrambling to push oil prices higher.

Indeed, prices have now erased any gains made following the additional cut announcement as bearish sentiment prevails among traders. Negative economic data from the United States and China and a worry about U.S. banks have led the surge in bearish feelings.

Bloomberg also reported that ADNOC was preparing to start shipping less crude oil abroad in compliance with the production cut, noting that it was the first sign that the production cuts are affecting export oil shipments.

Both reports noted that the 5% operational tolerance is the maximum rate at which ADNOC can cut shipments under long-term contracts without triggering penalty action.

Saudi Arabia meanwhile said it would reduce oil prices for Asian buyers. The move implies OPEC's largest producer expects weaker demand from its bigger buyer group in the near term.

The expectation was supported by April oil import figures for the continent, which revealed a dip on weaker buying from China and India. Total shipments to Asia averaged 26.39 million barrels per day (bpd) in April, down from 27.6 million bpd in March, per data from Refinitiv Oil Research.

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By Charles Kennedy for Oilprice.com

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