Saudi Arabia was said to cut February crude sales to China and southern Asian nations while largely sparing countries including Japan and South Korea, as it curbs supply as part of a deal between OPEC and other producers.
Two Southeast Asian refiners received cuts of about 30 percent from the world’s biggest crude exporter, according to two people with knowledge of the matter who asked not to be identified because the information is confidential. Reductions to a buyer in India were about 20 percent, one of the people said.
Overall term supplies to Asia for next month declined between 5 and 10 percent, according to one of the people. The reductions will primarily be focused on the medium and heavy oil varieties as the producer concentrates more on sales of lighter grades to stay in the battle for market share against U.S. and African rivals.
Saudi Arabia is trying to implement its portion of promised reductions under a deal between global producers, the success of which will determine if a recovery in benchmark prices is sustainable. The Dec. 10 agreement between the Organization of Petroleum Exporting Countries and 11 others including Russia is aimed at ending a glut that’s battered crude and the economies of producing nations worldwide. Kuwait said on Monday that OPEC and its partners will fulfill their pledged cuts.
State-run Saudi Arabian Oil Co. curbed supply to some oil majors by about 18 percent for February, one of the people said. The company, known as Saudi Aramco, gave at least one Chinese processor lower contractual volumes for next month, said two refinery officials who asked not to be identified because the information is private.
But at least eight buyers in Japan, South Korea and Taiwan received full supply for next month, according to officials at the refineries who asked not to be identified because the information is confidential. Some heavier crude was replaced with a lighter grade for one of the processors in Northeast Asia which got all of the overall volume it requested.
Aramco’s press office didn’t immediately respond to an e-mail seeking comment.
Aramco was said to be planning cutbacks to Asia, its most valued market, for next month that would be relatively smaller than to other regions such as the U.S. and Europe. For January sales, supply to parts of Southeast Asia and South Asia including India was curbed while buyers in North Asia were largely spared. The reductions this month in Asia were also said to be relatively smaller than to other parts of the world.
The Asia Pacific region will use 33.87 million barrels a day of oil in 2017, accounting for more than a third of global consumption, data from the International Energy Agency show. That’s an increase from estimated demand of 33.03 million barrels a day in 2016. In the Americas and Europe, oil use is seen staying flat this year, according to the Paris-based IEA.