Asia in no rush to buy ultra-low oil from Saudi Arabia

Higher prices in Saudi Arabia in January, lower overall demand for crude oil amid uncertainty over Omicron, China’s crackdown on illegal practices at its independent refineries, and a refinery maintenance season that began at the end of the first quarter of 2022 led Asian refineries to abstain. from additional supplies of Saudi crude for loading. January.

Refiners in the world’s largest oil-importing region have not asked for additional supplies from the world’s largest oil exporter, Saudi Arabia, beyond their long-term contracts, company officials told Bloomberg.

At least three refineries in Asia will not look for additional Saudi oil for loading in January, unnamed officials told Bloomberg.

Asian refiners typically request additional Saudi crude in the event of high demand and relatively low Official Selling Prices (OSP) for Saudi grades in the region.

However, earlier this month, Saudi Arabia raised the official selling price of its flagship Arab Light oil to a nearly two-year high premium over the Oman / Dubai benchmark, signaling confidence in Asian demand despite still high uncertainty over the COVID option. Omicron. …

Arab Light will sell $ 0.60 a barrel more next month than it did this month for Asian buyers. That’s $ 3.30 a barrel more than the Oman / Dubai benchmark for Middle Eastern oil going to Asia. The premium compared to Oman / Dubai is the highest for Arab Light since early 2020 – a few months before the start of the pandemic.

In addition to higher prices in Saudi Arabia, Asian refiners are in no rush to buy oil in excess of the volumes stipulated in their urgent supply deals due to low refining margins following peak winter demand in March when cargo loaded in January is due to arrive in Asia … …

In addition, traders told Bloomberg that China’s independent refineries, commonly known as teapots, are likely to see purchases decline in the coming weeks as the local government examines practices at refineries in Shandong province.

Omicron is also weighing on the market as trading in Asia has stopped in recent days, a West African oil seller told Reuters earlier this week.

Tsvetana Paraskova for Oilprice.com

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