Saudi Arabia’s crude oil sales to top importer China for loading next month rose after the kingdom cut the price of its main oil grade for buyers in Asia to the lowest level in more than five years.
State oil producer Saudi Arabian Oil Co (Saudi Aramco) is to provide around 56 million to 57 million barrels for loading next month to China, according to traders familiar with the sales, who asked not to be identified due to the sensitivity of the matter. That compares with 48 million barrels the previous month.
Aramco trimmed the price of Arab Light to the lowest level since late 2020 as concerns over a global glut persist, though the reduction was not as much as expected. Still, the cut has made Saudi crude more attractively priced than competing barrels from other spot sellers in the region, traders said.
Photo: Reuters
Indian refiners, meanwhile, are to receive at least 1 million barrels more next month than they would typically under long-term contracts, according to traders. That compares with at least 2 million barrels more this month.
The South Asian nation has faced US pressure to reduce its imports of Russian oil, with US President Donald Trump recently saying India would halt buying as part of a trade deal. New Delhi has not publicly commented on the claim, but has said it is seeking to diversify its sources and maintain energy security.
South Korean and Japanese refiners are also set to collectively get more Saudi oil than usual next month, traders said, though it was not immediately clear how that compared to this month, which was at least 9 million barrels higher.
Oil exports next month may also be higher from Iraq — OPEC’s second-biggest producer — which markets its oil differently from Aramco. Saudi crude is only sold via long-term contracts, while Iraq and other nations have part of their exports sold on a spot, or ad-hoc, basis rather than purely on term deals.
Iraq’s allocation of so-called destination-free cargoes — volumes which can be freely traded, rather than being committed to a specific destination — was larger than usual for next month, traders said. That flexibility may attract more interest from some buyers.
Oil was little changed at the start of this week, as traders monitored geopolitical risk before talks between the US and Iran are expected to resume today.
Brent traded close to US$68 a barrel, after its first back-to-back weekly drop this year, while West Texas Intermediate was near US$63.
“While geopolitics is providing near-term support, the supply picture is set to roar back as a driver for crude in the months ahead,” Westpac Banking Corp commodity and carbon research head Robert Rennie said. “We still expect Brent to eventually slide back into the low US$60s as we move through H1 this year and rising global production starts to weigh on prices.”
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