Saudi cuts February oil exports to RIL, Petronas, HMEL to meet Opec deal

Dubai/Singapore: Saudi Arabia has cut February term crude supplies to refiners in India and Southeast Asia, seeking to comply with an Opec deal, but it has held most of its exports to the rest of Asia steady for a second month, industry sources said on Wednesday.

State oil giant Saudi Aramco reduced February term supplies of mainly heavy crude to Indian refiners Reliance Industries and Hindustan Mittal Energy Ltd (HMEL), as well as to Malaysia’s Petronas, four sources familiar with the matter said.

Aramco has also cut oil supplies to another southeast Asian buyer for a second month in February, one of the sources said.

That means some major oil companies in Europe and the United States could see reductions of up to 18% in their term volumes for February, the source said.

“Saudi Arabia and Kuwait are focusing their cuts on US and European customers as they target excess inventories and protect market share in Asia,” Energy Aspects analyst Virendra Chauhan said.

Saudi Aramco and the other companies could not be reached for comment. Details on the amounts of the supply reductions could not be confirmed.

Saudi’s February supply reductions to a handful of Asian refiners mark the start of cuts to a region left untouched in January at the onset of the Opec output deal.

The producer maintained strong exports to Asia in January to protect its market share there and because it gets higher netbacks on sales to the East than it does for other regions.

The Organization of the Petroleum Exporting Countries (Opec) agreed to cut production by 1.2 million barrels per day (bpd) in the first half of 2017 to reduce a global supply glut and support prices.

World’s top exporter Saudi Arabia cut oil output in January by at least 486,000 bpd to 10.058 million bpd.

Still, Saudi Aramco kept February supplies to most North Asian refiners at full volumes for a second month, trade sources said, indicating it will have to continue cutting exports to Europe and the United States to meet its Opec commitment.

“I think the Saudis won’t touch volumes to Japan, South Korea and Taiwan. Southeast Asian demand is small when compared to North Asia,” a Singapore-based crude analyst with a European oil company said. Reuters