Saudi Arabia reduced the amount of crude it will supply next month to five refiners in Asia after OPEC+ agreed to extend its historic output cuts through July.
The volume of contracted oil the five buyers are seeking for July will be cut by 10% to 40%, according to refinery officials who asked not to be identified as the information is private. Some South Korean processors received steep curbs to their requested supply after being spared reductions last month, while three refiners in Japan will receive their full volumes after their flows were trimmed in June, the officials said, signaling the kingdom’s attempt to balance the cuts.
OPEC+ agreed to a one-month extension of its cuts to help underpin the market recovery, with Saudi Arabia following the pledge to prolong curbs with big price hikes to its crude. China has led a recovery in oil demand across Asia after the easing of lockdowns, although the rebound is expected to be uneven.
See also: Iraq Gets Serious on Oil Cuts By Asking Buyers to Forgo Cargoes
Saudi Aramco declined to comment on the supply allocations.
The reductions by Aramco were focused on heavier varieties for July-loading cargoes, said the refinery officials. That will further tighten the flow of medium-sour grades after Iraq, a habitual laggard on cuts, implemented its own curbs amid stricter policing of compliance by OPEC+, and as Venezuela’s volumes plunged to the lowest since 1945 due to U.S. sanctions.
(Updates with Aramco’s comment in fourth paragraph.)
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