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Saudi Arabia will supply all the crude oil that was requested by India’s state-owned refiners and at least five other Asian customers next month as the linchpin producer starts to ramp up output.
The kingdom will deliver in full what most of the refiners asked for in May-loading cargoes, while one of the customers got its volume to the U.S. curtailed, according to officials notified by Saudi Aramco. Two other customers received some cuts to overall volumes. Aramco declined to comment.
Led by Saudi Arabia, the Organization of Petroleum Exporting Countries and its allies will restore from May some of the supply that was cut back as the pandemic ravaged demand. Following that decision, the Saudis hiked pricing for the key Asian market in expectation that consumption will rebound further. The overall plan, which includes Riyadh’s return of a unilateral supply cut, was defended last week by Energy Minister Prince Abdulaziz bin Salman.
India’s current round of allocations attracted particular scrutiny after its four state-owned refiners including Indian Oil Corp. had submitted lower nominations, or requests for supply. Overall, the country will take about a single Aframax-size vessel — typically about 600,000 barrels — less than granted in the prior month’s allocations, people familiar with the matter said.
With tension between India and Saudi Arabia over Riyadh’s oil policy, its state-owned processors had asked to reduce next month’s volumes by about one-third of their monthly average. However, India’s refiners are in peak maintenance season and the nation is battling a resurgence in Covid-19, potentially indicating the amount needed for the month is below average.
Meanwhile, the volume of Arab Light crude was reduced for two other buyers in the region, and a third customer got its supply for Asia fulfilled but was notified of some cuts to its U.S. operations.
At least two European refiners received the volumes they requested, though one of them asked for a much lower amount than normal, according to traders involved in the market. Despite a slight cut in the official selling price of Arab Light for May delivery to northwest Europe and the Mediterranean, Saudi grades are less attractive to European buyers than alternatives such as Urals crude, which is now at the lowest price in a year, they said.
