SINGAPORE/TOKYO (Reuters) - The world’s top oil exporter Saudi Arabia has stepped up sales of light oil to Asia by offering buyers more cargoes on top of the full contract volumes it will provide for May, industry sources with knowledge of the matter said on Wednesday.
The offers will add to a glut of light oil supplies in Asia, increasing competition with fellow Gulf producer Abu Dhabi National Oil Co and Russia, said multiple sources, who declined to be identified due to the sensitivity of the matter.
“There will be less demand for light grades such as Das, Murban, ESPO and Sokol,” said a Singapore-based trader, referring to crude grades from Abu Dhabi and Russia.
State-owned oil company Saudi Aramco has also priced its Arab Extra Light crude at a competitive level, another trader said, after lowering the grade’s May official selling price to the lowest in eight months.
Saudi Aramco plans to supply full volumes of crude to least six buyers in Asia in May, the sources said, despite cutting production to comply with a deal between the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers.
OPEC and some non-OPEC producers pledged to cut output in the first half of 2017 to support oil prices.
To comply with the deal, Saudi Arabia has cut production of medium-heavy oil to keep its overall output lower. But it has kept supplies to Asia steady so far this year as it defends its market share in the world’s fastest oil-demand growth region against other producers.
In line with its strategy, Saudi Aramco reduced Arab Medium crude supplies and replaced it with Arab Light for some customers, the sources said.
Still, a buyer who has previously received cuts to his Arab Heavy term supplies said he will be getting the full contract volume of the heavy oil in May.
Since the OPEC cuts, medium-heavy crude supplies from the Middle East to Asia have tightened, incentivizing traders to move similar oil from Europe and the Americas to meet Asia’s demand.
Reporting by Osamu Tsukimori in TOKYO and Florence Tan in SINGAPORE; Editing by Paul Tait and Christian Schmollinger