Saudi Maintains Crude Supply To North Asian Refiners Despite OPEC+ Cuts

Despite its pledge to cut output by 500,000 barrels per day, Saudi Aramco will supply full crude contract volumes loading in May to several North Asian buyers, several sources with knowledge of the matter said.

This comes after OPEC and its allies, known as OPEC+, surprised markets last week by announcing an additional output cut of 1.16 million barrels per day (bpd) from May to the end of the year.

Investors were closely watching Saudi Aramco's monthly allocation to see if planned output cuts would tighten supplies in Asia, the world's largest crude import market.

People are wondering whether the additional voluntary cut will actually affect supply or if it is simply intended to prop up oil prices, according to a source at an Asian refiner who declined to be identified because he is not authorised to speak to the media.

Following the OPEC+ announcement, Brent and West Texas Intermediate crude futures rose 6% last week, returning to levels last seen in November.

Saudi Aramco also surprised the market last week by raising prices for its flagship Arab Light crude, which it sells to Asia for the third month in a row. It also raised the prices of other oil grades to Asian customers in anticipation of tighter market supply.

Asia's oil demand is expected to fall in the second quarter as several Asian refiners, including Sinopec, South Korea's third largest refiner and Aramco affiliate S-Oil Corp, Fuji Oil, and Idemitsu Kosan, close 1.15 million bpd of crude distillation capacity in May.

Nonetheless, some investors are optimistic about a recovery in China's oil demand and anticipate that global oil markets will tighten in the second half of this year, pushing prices closer to $100 per barrel.

Meanwhile, the Abu Dhabi National Oil Company (ADNOC), the UAE's state-owned oil giant, has informed at least three Asian buyers that it will supply full contractual volumes of crude in June, according to trade sources.

The UAE plans to cut 144,000 bpd from May as part of the OPEC+ cuts.