What's worse for Saudi Arabia?
- selling oil for $50/bbl
- selling no oil when it's trading at $60/bbl
LOL.
This is the headline: European interest in Saudi crude wanes.
Wanes?
The Europeans lose interest in Saudi crude oil.
Four of Saudi Arabia's term crude customers in northwest Europe and the Mediterranean have opted to request no March-loading cargoes, while two other regional buyers have only asked for the minimum under their contractual obligations.
The waning interest from Europe follows state-controlled Saudi Aramco's decision to lift its official formula prices for March crude exports to northwest Europe and the Mediterranean by $1.30-1.40/bl compared with February. It could free up additional March-loading cargoes for Aramco's core customer base in Asia-Pacific.
Aramco has had to carry out a delicate balancing act between retaining its share of the sour crude market and meeting Riyadh's Opec+ production pledges. Early last month, Saudi oil minister Abdulaziz bin Salman surprised the market by announcing his country would voluntarily reduce its crude output by 1mn b/d under its official Opec+ quota of 9.12mn b/d in February and March. The move is likely to be reflected in Saudi crude exports.
Saudi exports to destinations west of Suez were already declining. January-loaded shipments to Europe and the Americas — including volumes discharged into Egyptian storage in Sidi Kerir, where many western buyers collect their crude — has reached 805,000 b/d so far. This accounts for just 13pc of last month's 6.12mn b/d of exports from Saudi crude terminals, excluding shipments from the Neutral Zone that Riyadh shares with neighbouring Kuwait, according to Argus tracking. An average 1.27mn b/d headed west of the Suez Canal last year, or around 19pc of total Saudi loadings.
More at the linked article.
More:
Refiners in northwest Europe and the Mediterranean may look to offset lower Saudi imports with a higher intake of more competitively priced Russian Urals or Iraqi Kirkuk blend marketed by the Kurdistan Regional Government (KRG), according to traders. Ample supply and weak long-haul buying has seen Baltic Urals values shed $1.40/bl over the past two weeks, with Black Sea cargoes of the Russian grade losing $1.55/bl over the same period. Meanwhile, spot price assessments of KRG-sold Kirkuk cargoes have dropped by 50¢/bl on the week, with traders pointing to a slump in interest from Chinese buyers.
Other Mideast Gulf crudes could also benefit from weaker European demand for Saudi crude. Although Iraq's Somo and Kuwait's KPC followed in Aramco's footsteps with month-on-month increases in their official formula prices for customers in the region, the rises were not as steep.
Market participants have suggested that European refiners might show greater interest in North Sea grade Johan Sverdrup. Like Russia's Siberian Light and Libya's Es Sider, Johan Sverdrup is used by some refiners as an indirect substitute to meet either light sweet or sour crude requirements.
It's a global product. Who cares if country A buys oil from country N? Just mark it down a few cents and it sells to someone else. Fungible.
ReplyDeleteFor that matter, transport is generally more favorable (for pricing) if Saudis sell "east of the Suez" (to Asia). Sure they market some cargoes different places. But the benefit of diversity of customers and of ships is they can just decide to send to different locations.
Oh...and the Euros would have bought those cargoes if they were priced more competitively. Saudis are doing the lion's share of the OPEC cutting. And the common sense way to do that is to price it out. Which just leads to those customers that have spot purchases, declining them.
Tell that to Saudi Arabia, that it doesn't matter from what country the EU buys their oil. LOL.
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