Saudi Arabia is offering more crude to customers in Asia, a sign the world’s largest oil exporter does not intend to cut output as it battles for market share with other top producers.
Saudi’s offers of more oil come after it recently completed maintenance programmes that had reduced supplies from some fields during the second quarter, traders said. The kingdom will also soon increase its Arab Extra Light crude output in an expansion of the Shaybah oilfield.
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But some Asian refiners said they are not rushing to buy more Arab Extra Light after Aramco raised the oil’s official selling price (OSP) by 80 cents a barrel in June, making it more expensive relative to similar Abu Dhabi grades.
In a market that still has the most growth potential and in which many producers, including Iran, Iraq and Russia, are trying to increase sales, that does not portend well for Saudi Arabia as it begins to bring new output online in June.
“It will be challenging (for Saudi Arabia). One of the things that will come into play is whether they will start cutting OSPs to attract customers and keep volumes intact,” said Sushant Gupta, downstream oil analyst at energy consultancy Wood Mackenzie in Singapore.
State oil company Saudi Aramco plans to ramp up output from the Shaybah field over the next two weeks to 1 million barrels per day (bpd), fully utilizing its expanded capacity, Saudi media reported on Thursday, quoting the company’s chief executive.
This month, Saudi Aramco has asked at least two Asian refiners if they will lift more oil in June on top of contract volumes, two trading sources familiar with the matter said.
Saudi Aramco did not immediately respond to an emailed request for comment on any offers made to Asian refiners.Iran and Iraq have also said they will increase output, slimming hopes that the Organization of the Petroleum Exporting Countries (OPEC) will agree to any long-term plan to curtail supplies when it meets in Vienna next week.