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Saudi Aramco cuts February crude supply to some Asian refiners

January 14/2021

MOSCOW (MRC) -- Top oil exporter Saudi Arabia has cut supplies of February-loading crude for some Asian buyer by up to a quarter while meeting requirements of at least four others, reported Reuters with reference to several refinery and trade sources with knowledge of the matter.

This comes after Saudi Arabia pledged additional voluntary output cuts of 1 million barrels per day (bpd) in February and March under a deal between the Organization of the Petroleum Exporting Countries and its allies including Russia, a group known as OPEC+.

Most OPEC+ producers will hold production steady in the face of new coronavirus-induced lockdowns. Global oil prices are trading at their highest since February following Saudis decision.

Two North Asian refiners have received a 10% supply cut from the state-owned energy giant Saudi Aramco, sources said. February allocations for at least three Indian refiners have been cut between 15% and 26%, the sources said on the condition of anonymity.

Saudi Aramco declined to comment.

Last year, the company cut June-August shipments to Asian term buyers to comply with the OPEC+ agreement.

Saudi Arabia exported about 7 million barrels per day of crude, of which around 70% landed in Asia last year, data on Refinitiv Eikon showed.

While the additional Saudi oil supply cut could help support the spot market this month, Asias crude consumption is expected to fall amid seasonal refinery maintenance while arbitrage supplies from the West could supplement demand, trading sources said.

Differentials for Middle East benchmarks cash Dubai and DME Oman to Dubai swaps fell by 20 cents from Tuesday, data compiled by Reuters showed, due to weak demand.

Refiners, including Indias HPCL-Mittal Energy Ltd (HMEL), Taiwans Formosa Petrochemical Corp, and Thailands IRPC Pcl and Bangchak Corp, are heading into maintenance in the first quarter.

Japans Idemitsu Kosan Co has shut a 150,000 barrels-per-day (bpd) crude distillation unit (CDU) following a fire mishap.

As MRC wrote previously, Formosa Petrochemical Corporation (FPCC) was running its crackers in Taiwan at 100% capacity utilisation in end-December, 2020. The company"s crackers have combined ethylene production capacity of 2.935 million metric tons/year. Meanwhile, FPCC is planning overhaul of the smallest cracker in mid-2021.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's DataScope report, PE imports to Russia decreased in January-November 2020 by 17% year on year and reached 569,900 tonnes. High density polyethylene (HDPE) accounted for the greatest reduction in imports. At the same time, PP imports into Russia increased by 21% year on year to about 202,000 tonnes in the first eleven months of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.

Saudi Aramco, officially the Saudi Arabian Oil Company, is a Saudi Arabian national oil and natural gas company based in Dhahran, Saudi Arabia. Saudi Aramco"s value has been estimated at up to USD10 trillion in the Financial Times, making it the world"s most valuable company. Saudi Aramco has both the largest proven crude oil reserves, at more than 260 billion barrels, and largest daily oil production.
Author:Margaret Volkova
Tags:Asia, North America, Formosa, HPCL, Idemitsu, IRPC, Saudi Aramco, Russia, Saudi Arabia, Taiwan.
Category:General News
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