Asia-Pacific demand rises for US crude cargoes

US crude flows to Asia-Pacific destinations are poised to rise on an uptick in buying interest for economic alternatives to Mideast Gulf crude supplies.

At least five Asian import tenders were issued this week that listed US crude grades as eligible options to offer, likely driven by near-term uncertainty surrounding production levels in Saudi Arabia after the 14 September attack on key oil infrastructure.

Sri Lanka's state-controlled Ceypetco issued a tender to buy a 700,000 bl cargo of WTI for 21-25 December delivery to the port of Colombo, marking its first attempt to take US light sweet crude amid a bid to diversify its crude import slate.

Caypetco typically runs only Abu Dhabi light sour Murban crude at its 50,000 b/d Kelaniya refinery near the capital Colombo, although the refinery has taken small volumes of medium sour Oman and light sweet Algerian Saharan Blend in the past.

But a leap in Murban crude prices to six-year highs following the 14 September attacks on Saudi Arabian oil infrastructure is likely helping to encourage the refiner to examine more economic alternatives from the Americas.

India's largest state-controlled refiner, IOC, meanwhile closed two tenders this week that would accept either sweet or sour crude supplies from the US Gulf coast. The firm frequently includes US light sweet crude grades in its list of eligible cargo options to offer into monthly spot import tenders, but the inclusion of sour grades this week indicates IOC could be examining suitable alternatives to Arab Light and Arab Extra Light, which both have a sulfur content higher than 1pc and were grades impacted by the drone attacks.

India's Hindustan Petroleum (HPCL) also issued a tender, seeking 1.9mn bl to 2mn bl of crude for 1-10 December delivery to the Visakhapatnam refinery on the eastern coast of India.

And offers were due yesterday for Taiwan state-controlled refiner CPC's tender to buy North American, west African or Asian crude for delivery to Kaohsiung or Sha-Lung, Taiwan, in December.

Chinese refiners are also beginning to step up US oil purchases again despite a new 5pc tariff on US crude imports that is diverting more prompt cargoes.

Saudi Aramco's US subsidiary Motiva on 16 September made plans to load the VLCC Maran Aphrodite at the US Gulf coast around 24 October for a voyage to Ningbo, China. Chinese state-controlled Sinopec's trading arm Unipec placed the similarly sized New Solution on subjects to leave the US for China on 25 October, and Chevron is planning to take a Bahri-owned VLCC from the US Gulf coast to Ningbo starting 15 October, according to shipping fixture reports seen by Argus .

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