The world’s largest oil exporter, Saudi Arabia, will ship additional volumes of crude to at least three refiners in Asia in November, sources familiar with the matter told Reuters on Monday.
Saudi Arabia’s state oil giant Aramco will also deliver the full volumes under the contracts to four other Asian refiners, Reuters’ sources say.
Some of the Asian buyers asked for full or incremental supply on top of the contractual volumes because of attractive prices for November, the sources added.
Earlier this month, Saudi Arabia cut its official selling prices (OSPs) for its key Asian market for November. This was a second cut for Saudi prices in two consecutive months, after the price rise spurred by the OPEC+ decision to stick to monthly additions of 400,000 bpd in total rather than boosting output more to cap international prices.
The Saudi cut amid tight OPEC+ supply signaled that the world’s top oil exporter was keen to keep its prices on the Asian market competitive. In the summer, when Saudi Aramco was raising the price of its crude to its most important market, Asian refiners started turning to cheaper spot supply of cargoes from the Americas.
Another Middle Eastern oil exporter and an OPEC member, Kuwait, is also set to ship additional volumes on top of the contractual supply, sources told Reuters.
Last week, Saudi Aramco’s chief executive Amin Nasser said at the Energy Intelligence Forum that the natural gas crunch had increased global oil demand by 500,000 bpd.
Some utilities in Asia are switching from gas to oil, as Asia has more flexibility in burning oil at power plants than Europe, where steep carbon regulations limit European utilities from burning oil, Rystad Energy at the end of September.
“If the gap between LNG and oil prices remains wide, Asia is set to boost oil demand by 400,000 barrels per day on average over the next two quarters,” Rystad Energy said in a report.