Saudis Cut Oil Flows to China While Meeting Other Requests

(Bloomberg) —

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Saudi Arabia will provide some Chinese buyers with less crude than they asked for next month, while fulfilling requests from many other customers in Asia after OPEC+ pledged to speed up production hikes.

Japan, South Korea, Thailand and India will get the oil volumes they had sought, with some even getting extra supplies, according to refinery officials who asked not to be identified as the information is private. State-run marketer Saudi Aramco typically doesn’t provide buyers with a reason why volumes are cut.

Aramco didn’t immediately reply to an email seeking comment on the matter.

Many Asian buyers asked Aramco for more oil during the so-called nomination process held this week as they sought alternatives to Russian varieties. China and India continue to be big buyers of Russian crudes after Moscow’s invasion of Ukraine, enjoying deep discounts for their willingness to keep importing grades such as flagship Urals and ESPO from the Far East.

July supplies of Saudi oil were especially sought-after by many in Asia due to strong refining margins. Despite a higher-than-expected increase in prices from the kingdom, buyers are still finding its cargoes more affordable than arbitrage supplies from the North Sea and the US following a slump in benchmark prices in the Middle East versus London and US markers.

At least three European refiners have received full contractual volumes for July delivery from Aramco, said refinery officials with knowledge of matter.

(Updates with allocations to European refineries in the last paragraph.)