Saudis to sell extra oil
Saudi Arabia is offering extra crude volumes on top of its contractual supplies to some buyers in Asia, according to people with knowledge of the matter.
Evidence is mounting that Saudi Arabia is heeding President Donald Trump’s call for OPEC to keep the oil market amply supplied and rein in prices.
The Middle East kingdom is offering extra crude volumes on top of its contractual supplies to some buyers in Asia, according to people with knowledge of the matter, as the OPEC’s de facto leader plans record oil output after unwinding a deal with its allies to curb output. The Organization of the Petroleum Exporting Countries has come under pressure from Trump to pump more before the U.S. midterm elections in November, after a rally in crude to a 2014 high lifted American gasoline prices. Meanwhile, some Saudi customers such as India have warned that higher prices will curb demand. In China, Unipec — the trading unit of the nation’s biggest refiner — had cut purchases citing costly pricing by the kingdom.
Saudi Arabian Oil Co. has pitched additional cargoes of its Arab Extra Light crude to at least two buyers in Asia for August, according to people with knowledge of the matter who asked not to be identified because the information is private. That’s beyond monthly contractual volumes from the state-run producer known as Saudi Aramco. The company’s press office declined to comment.
One of the Asian processors that received the offer for Arab Extra Light grade has taken the additional supplies, one of the people said, without giving details about the volume.
Saudi Arabia is making the offer at a time when investors are watching for any signs that it will step in to fill any potential supply gap caused by renewed U.S. sanctions on Iran, falling output in Venezuela and disruptions in Libya. The nation and Russia last month persuaded OPEC and its allies to boost output after 18 months of production curbs succeeded in shrinking a global glut and boosting prices to levels last seen in 2014.
“The Saudis were under immense pressure from President Donald Trump to raise production to keep a cap on prices,” said Virendra Chauhan, a Singaporebased oil analyst at Energy Aspects Ltd. “Saudi Arabia has pre-emptively raised output ahead of a potential shortfall from lost Iranian volumes later in the year. It will most likely continue to place its volumes in Asia” as its increased supply of lighter grades has shut some other arbitrage cargoes flowing to the east, he said. Brent crude, the benchmark for more than half the world’s oil, tumbled 4.6 percent Monday to $71.84 a barrel. U.S. benchmark West Texas Intermediate fell 4.2 percent to $68.06 a barrel.
Saudi Energy Minister Khalid Al-Falih committed at last month’s OPEC meeting to “do whatever is necessary to keep the market in balance” and prioritize its customers. Earlier this month, the world’s top crude exporter also gave full contractual volumes to at least six Asian customers for August. U.S. imports from Saudi Arabia jumped 51 percent in July.