BW Communities

Saudi Offers Asian Refiners More Oil

BW Online Bureau Nov 08, 2014

<?xml version="1.0" encoding="UTF-8"?><root available-locales="en_US," default-locale="en_US"><static-content language-id="en_US"><![CDATA[Top oil exporter Saudi Arabia has offered more crude to Asian refiners in July, evidence that it is taking steps to unilaterally increase supplies after OPEC talks collapsed earlier this week. India's Mangalore Refinery and Petrochemicals Ltd. has bought about 600,000 barrels of extra oil for July from the kingdom, two sources with direct knowledge of the matter said. Two or three Asian buyers are keen on more oil, and will finalise any additional volumes in coming days, a separate refiner source said. Adding to indications that the Saudis are prepared to go it alone in meeting rising demand for oil, a Saudi newspaper on Friday said the world's top exporter would lift output in July to 10 million bpd, from 8.8 million bpd in May. The additional offers to refiners come after the Organization of the Petroleum Exporting Countries failed to take a decision on raising output on Wednesday, resulting in the talks breaking down in acrimony. Crude futures fell on Friday on the news of extra Saudi supply, paring earlier gains after Brent rose to a five-week high of $120 a barrel. Asia, led by China, is driving the global increase in oil consumption, so higher Saudi supply would benefit refiners in the region. Oil prices were near their 2-1/2 year highs in recent weeks in part due to concerns of supply disruption from the Middle East and North Africa amid rising demand from emerging nations such as China and India. The Paris-based International Energy Agency (IEA) expects Asia to burn 900,000 barrels per day (bpd) more oil in 2011 than 2010, over 70 percent of the 1.29 million bpd global demand growth forecast for the year. NOT ALL NEEDED Still, many regional refiners already have what they need for July, industry sources with direct knowledge of negotiations said on Friday, so have declined Saudi Arabia's offer of additional supplies. "They are asking if anybody has an interest in additional volumes," a source at a north Asian refiner said. "They have not asked us for a while." At least two Asian term buyers said Saudi Arabia will supply them with full contracted volumes of crude oil in July, steady from June. There were no adjustments in allocated volumes of heavy and light crude grades, the sources said, adding that the move was "in line with expectations." Saudi Arabia made no changes to the operational tolerance in the supply allocations, the sources added, meaning buyers have the option of asking for cargoes to be loaded with up to 10 percent more or less crude than contracted. OPEC estimates show an implied market requirement of about 2 million barrels per day more of oil for the third quarter and 1.5 million bpd for the fourth quarter of this year, and Saudi Arabia would be keen to keep its share in fast growing markets. OPEC and non-OPEC oil producers are competing hard for the market in China. Riyadh, unwilling to give up ground, supplied Beijing with more oil even as the kingdom instigated OPEC's record supply cuts as recession engulfed many of the world's major economies in 2008-2009. China is expected to bring online around 500,000 bpd of new refining capacity this year. (Reuters)