* Other Mideast producers expected to cut April OSPs as well
* At least four refiners load maximum Mideast crude in April
* Contango market structure supports putting oil in storage (Adds comments)
By Shu Zhang and Nidhi Verma
SINGAPORE/NEW DELHI, March 9 (Reuters) - At least four Asian refiners, including India’s HPCL and BPCL, plan to maximise purchases of April-loading Middle East crude after Saudi Arabia drastically cut its prices for term contract buyers, four sources at the refiners told Reuters on Monday.
State oil giant Saudi Aramco, the world’s top oil exporter, on Saturday cut its selling price for Arab Light crude oil to Asia for April to a discount of $3.10 to the Oman/Dubai average, down $6 a barrel from the March price - its biggest-ever month-on-month price drop.
The sources said they were still waiting for other Middle East producers such as Kuwait and Iraq to issue their official selling prices (OSPs), which are due by the 10th of each month.
The other Middle East producers are expected to cut their April crude OSPs to follow the trend set by Saudi Arabia, de facto leader of the Organization of the Petroleum Exporting Countries (OPEC).
The four buyers said their refineries are looking to buy as much bargain-priced crude as possible under their long-term contracts with the Middle East producers, even as some Asian refineries have reduced crude throughput levels due to seasonal plant maintenance and the coronavirus outbreak that has slashed global fuel demand.
“In Middle Eastern crude (prices), definitely there will be substantial softness, we will try to maximize to the extent possible,” said M.K. Surana, chairman of India’s Hindustan Petroleum Corp (HPCL).
Two of the four refinery sources said they will seek the maximum amount of crude they can take in April from Saudi Arabia due to the deeply discounted OSPs.
The current contango market structure - with prices in the near term lower than in future months - is also prompting buyers to put extra crude into land and floating storage, they said.
One of the two sources said his refinery is seeking an additional 2 million barrels for April loading, on top of the maximum amount it normally takes under its long-term contract with Saudi Arabia. The plan is to store that crude in a floating tank, he said.
Saudi Arabia has told some buyers it could “accommodate customers’ needs” for April-loading crude, said the second refinery source that is seeking to maximise Saudi crude purchases.
“OPEC has extra production capacity. So does Russia. Now it’s a price war,” he added.
A fifth source, an official at a crude oil procurement team at a Japanese refiner, said it is mulling the possibility of increasing imports from Saudi Arabia from May give the price reduction. The refinery had already fixed its April lifting plan and has limited storage capacity.
Taiwan’s Formosa Petrochemical Corp may also look at buying more spot volumes while increasing its term nomination, its spokesman KY Lin told Reuters.
“This is a limited window of opportunity to tap the market for Middle Eastern oil, as Brent-linked crudes are still costlier compared to Dubai-linked,” said R. Ramachandran, head of refineries at Bharat Petroleum Corp (BPCL).
“Gradually the gap will narrow as Dubai will drag down other benchmarks as well,” he said.
Reporting By Shu Zhang and Nidhi Verma, additional reporting by Yuka Obayashi in Tokyo and Seng Li Peng in Singapore; Editing by Himani Sarkar and Tom Hogue