-
Saudis cancel rare prompt oil offer to Asia after OPEC deal -sources
Top global crude oil exporter Saudi Aramco last week cancelled a rare offering of prompt cargoes to buyers in Asia, five sources with knowledge of the matter said on Friday, pulling back on a private tender after OPEC unexpectedly agreed to an output cut.
The state oil giant has excess crude to sell as at least two domestic refineries are scheduled for maintenance in the fourth quarter, while Asian buyers may have opted to lift minimum term volumes next month after official monthly prices rose more than expected, the sources said.
In what is sometimes called a private tender, selected buyers across Asia last week were given the option of purchasing Arab Light or Arab Heavy crude cargoes loading at Ras Tanura in October in the tender, the sources said, although few other details were available.
But Saudi Aramco subsequently cancelled the tender after the Organisation of Petroleum Exporting Countries (OPEC) reached a deal to cut output on Sept. 28, the sources said.
It was not immediately clear if Saudi Aramco sold any cargo before or after cancelling the tender.
Saudi Aramco officials did not respond to an emailed request for comment. The company does not comment on its oil sales.
The sources talking on the matter asked to remain anonymous due to its sensitivity.
Asian buyers have remained cautious following the OPEC supply cut agreement, awaiting the next meeting in November for more details on how the agreed cut might be divvied up between the group’s members.
SPOT CRUDE SALES?
The crude sales tender may indicate an interest from Saudi Aramco to sell spot cargoes in future, trade sources said, which would be a major change in the producer’s marketing strategy.
Saudi Arabia sells its crude oil mainly via annual contracts to customers at designated destinations, meaning that its oil is rarely traded on the open market.
Still, the producer has in the past few years shown some flexibility in selling spot cargoes from its storage in Okinawa, Japan, to North Asian buyers.
“Spot sales help in price discovery, providing an additional guide for the producer when it sets monthly prices,” an industry source said.
Saudi Aramco typically sets its crude prices based on the changes in the Dubai market structure, recommendations from customers, and after calculating the change in the value of its oil over the past month, based on yields and product prices.
The official Saudi prices help to set the trend for crude grades from Iran, Kuwait and Iraq, affecting more than 12 million barrels per day (bpd) of oil bound for Asia. Dave Winfield Jersey
Share This
