Saudi Aramco to supply crude oil to some Asian refineries in May

Saudi Arabia is world’s largest oil exporter and it has reportedly tified some refineries in Asia that it will be supplying full contractual volumes of crude in May. As oil market is currently undergoing historic shock that is abrupt, extreme and at a global scale, Organisation of Petroleum Exporting Countries (OPEC) and allies including Russia also agreed to reduce production by 9.7 million barrels per day (bpd) in May and June. As per reports, production cut is aimed to contribute to efforts at stabilising market. 

While speaking to Reuters, three sources who have kwledge of matter said that re is change in volume of oil supplied as state oil giant, Saudi Aramco has altered ratio among its crude gres by increasing Arab Light quantities and reducing those of Arab Heavy. In a bid to provide oil to Asian countries, Saudi Aramco has also reportedly me deep price reductions for crude in May as fuel demand and complex refining margins in Singapore slumped. 

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Worldwide oil demand shock

In its monthly market report, OPEC said that ramifications of COVID-19 response resulted in ‘unprecedented’ worldwide oil demand shock. organisation said that demand shock led to massive sell-offs in global oil market amid a significant crude surplus. 

According to report, world oil demand growth forecast for 2020 has been revised lower by 6.9 million barrel per day to a historical drop of around  6.8 million barrel per day. Similarly, n-OPEC oil supply is forecast to decline by 1.50 million barrel per day, a downward revision of 3.26 million barrel per day from previous projection.

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Meanwhile, earlier this month, 9.7 million bpd deal was agreed by all participants after re was a delock because of Mexico t giving consent to an earlier deal which proposed a 10 million barrel per day. As per agreement, 9.7 million barrel per day production cut will come into effect from May 1 and will continue for an initial period of two months ending June 30. For next six months, total justment agreed will be 7.7 million barrel per day output cut which will be followed by a 5.8 million barrel per day production cut for a period of 16 months.

(Im source: AP) 

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