Saudi cuts March oil volumes to China by at least 500,000 bpd - sources

LONDON, Feb 27 (Reuters) - Saudi Arabia, the world’s top oil exporter, is reducing crude supplies to China in March by at least 500,000 barrels per day (bpd) due to slower refinery demand following the coronavirus outbreak, two sources with knowledge of the matter said.

The scale of the reduction underlines the drop in consumption caused by the outbreak in the world’s top oil importer. China normally takes 1.8 million bpd to 2 million bpd of Saudi crude, the sources said.

“The reduction is due to lower demand,” one of the sources said, declining to be identified.

The virus has caused more than 2,700 deaths in China and has spread rapidly in Iran, Italy, South Korea and elsewhere. The International Energy Agency and others analyst have lowered oil demand forecasts due to reduced travel and economic growth.

State oil company Saudi Aramco declined to comment.

Reuters had reported on Feb. 12 that Saudi would reduce volumes to Asia in March.

China state-owned Sinopec Corp, PetroChina , China National Offshore Oil Company and independent refiners, such as Hengli Petrochemical and those in Shandong, have cut their crude processing rate in February.

Saudi oil contracts allow the seller or the buyer to adjust loading volumes by plus or minus 10% of contracted volume, depending on demand and shipping logistics under a contractual clause known as operational tolerance. (Additional reporting by Rania el Gamal Editing by Edmund Blair)