Saudi oil giant Aramco is cutting supply of its heavier crudes to Asia in April, due to field maintenance, despite meeting full volume nominations for next month, multiple sources familiar with the plans told Reuters on Monday.
Most buyers in China and India will receive the full contractual volumes they had asked for, although the supply slate of grades is being reshuffled to include fewer barrels of heavier crudes, according to the unnamed sources who have spoken to Reuters.
At least one Chinese buyer asking for additional volumes of Arab Medium and Arab Heavy has been denied, while at least one Indian refiner saw full volumes met, but with reduced heavy crude volumes, the sources told Reuters.
Last week, Saudi Arabia raised the official selling prices of its crude for Asian buyers for April following the extension of the OPEC+ production cut agreement until the end of the first half of 2024.
The price for the country’s flagship Arab Light grade was raised by $0.20 per barrel over the Oman/Dubai average, meaning April deliveries will cost $1.70 per barrel more than the Oman/Dubai average, up from $1.50 per barrel this month.
At the same time, Saudi Aramco lowered its prices for European buyers, by between $0.60 and $0.70 per barrel. Prices for sales to the United States were virtually unchanged.
The price hike to Asia came despite expectations by some in the oil industry that the Saudis would leave the April prices unchanged from March.
Early this month, OPEC+ agreed to extend its production cuts as benchmark prices remained stubbornly range-bound, largely on expectations of weak demand growth and additional supply from non-OPEC producers that could satisfy most of the new demands coming this year.
The rollover of the cuts, including Saudi Arabia’s extension of its extra voluntary production reduction of 1 million barrels per day (bpd), was widely expected by the market and failed to make any impression on oil prices.
By Tsvetana Paraskova for Oilprice.com
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