Traders may divert some Oman crude if China demand slows: H E Rumhi
If the demand of crude oil decreases in China due to coronovirus outbreak, the sultanate expects traders to divert some supplies to other destinations.
China, which is now struggling with the economic impact of deadly virus, is the biggest buyer of Oman’s oil, with sometimes more than 90 per cent of the country’s monthly crude sales going to the top Asian buyer.
“We sell most of our export to traders, even refineries tend to trade too," H E Mohammed al Rumhi, Oman’s Minister of Oil and Gas, told S&P Global Platts when asked what Oman intends to do if China’s demand slows.
“They normally sell to China and I expect them now to divert some volume to other destinations which we don’t restrict,” H E Rumhi said, as reported by S&P Global Platts.
Crude traders reported on Tuesday that refineries in China were cutting runs as a result of falling product margins, such as those for naphtha, gasoline and middle distillates. Traders also reported seeing prompt February loading and March loading cargoes being resold in China, which is likely to add pressure to the Middle East crude prices in the April spot market, according to S&P Global Platts report.
Oman, which is a member of the OPEC+ alliance, sold over 69 per cent of its oil output in December to China, which imported an average of 680,000 barrel per day of crude from the country in 2019, according to data from China Customs and the International Energy Agency.
Oman’s oil exports to China touched to a new monthly high of 26.83mn barrels in November, representing almost 93 per cent of the country’s total oil exports during that month, according to the statistics released by Oman’s Ministry of Oil and
Gas. Refiners in China are poised to cut both crude imports and throughput as the coronavirus outbreak reduces consumption, with transportation, manufacturing and industrial activities all slowing down, S&P Global Platts reported last week. The report said that Chinese refineries may decide to keep buying Omani crude to build stockpiles even if they are temporarily reducing output.