Saudi Aramco allocates full Sep crude term supply to Asian refiners

Saudi Aramco has allocated full term volumes to Asian refiners for September-loading crude supply, Asian traders and end-users said Aug. 12, while volumes to Asia's largest crude importer, China, were seen easing on the month.

Aramco could not be immediately reached for an official comment.

"We got allocation as usual," a source at one Asian refiner said.

In China, total Saudi crude allocations for September were heard at around 43 million barrels, down from the 43 million-47 million barrels range previously reported for August-loading cargoes.

September volumes to Chinese majors Unipec and CNOOC were seen rising on the month by some, although this was offset by falling volumes to PetroChina and Fujian Refining and Petrochemical over the same period. Zhenhua Oil was seen taking no Saudi crude for September after taking 1 million barrels in August.

Fujian Refining's fall in volumes comes as the company's 280,000 b/d refinery is expected to undergo turnaround over Nov. 1-Dec. 20.

Elsewhere, at least two South Korean refiners and one Japanese refiner reported being granted full allocation for September-lifting term barrels, with the companies' logistics management teams seeking the most ideal tanker fixtures to lift the Saudi barrels and co-load some other Persian Gulf crude grades next month.

"Aramco has always respected [Asian] customers' term contractual volumes regardless of the OPEC+ production cuts in the past few years, so the monthly term supply was never an issue for us ... We are mainly focusing on improving logistical efficiency, both in terms of cost and voyage timing in times of dismal refining margins," a feedstock and logistics management source at a major South Korean refiner based in Seoul said.

Market structure

Sentiment for the current month's October-loading Middle East crude cycle was mixed. While Asian end-user demand remained on a path of fragile recovery, fundamentals have tightened after Libya's giant 300,000-b/d Sharara field was forced to shut down Aug. 5.

Although Libyan crude flows to Asia have fallen significantly in recent years, the shutdown will nonetheless have a knock-on effect, as European refiners that typically import Sharara crude will now have to compete for the same barrels as Asian refiners.

Crude oil differentials in both Middle Eastern and European crude markets have rebounded in recent days as a result. The Platts-assessed front-month Dubai cash-futures spread -- an indicator of sentiment in the Middle East sour crude market -- reached its highest for the month at a premium of $1.07/b on Aug. 8, up 37 cents/b on the day, S&P Global Commodity Insights data showed.

Nonetheless, the spread has averaged sharply lower this month, at a premium of 83 cents/b in the month to Aug. 8, down from an average premium of $1.60/b in July.