The request for additional July supplies signals that China may be starting to feel the pinch from the lost Iranian barrels as well as curtailments from other producers including Venezuela.
Thursday 13, June 2019
(Bloomberg) –Saudi Arabia is willing, for now, to satisfy Chinese requests for extra crude as supplies are squeezed elsewhere.
At least one Chinese customer got additional oil from Saudi Aramco for loading in July on top of its normal contractual volumes. At least five other Chinese buyers got what they requested, though it’s not clear if they asked for extra crude.
Saudi Arabia is juggling its commitment to restrict oil production as part of the Organization for Petroleum Exporting Countries (OPEC) pact to shore up prices with its pledge to make up a shortfall in supply if requested by its customers after US sanctions waivers against Iran were discontinued.
China, the world’s biggest oil importer, is also buying less oil from the US because of the worsening trade war between Washington and Beijing.
In Europe, five refineries representing a significant proportion of the continent’s buying are getting their full Saudi Arabian allocations for July as normal.
Global benchmark Brent crude has fallen around 19 per cent from a high in late April despite the supply losses, as the trade dispute erodes confidence in the global economy. That will ratchet up pressure on the OPEC and its allies to at the very least extend their output curbs at their upcoming meeting in Vienna.
Saudi Aramco fulfilled the contractual volumes nominated by three customers in other North Asian countries while reducing supplies of lighter varieties to one other buyer in the region.