Aramco to meet partial Mediterranean May crude demands

State-controlled Saudi Aramco will meet only some of European refiners' higher interest in May-loading crude.

Three Aramco clients in the northwest European and Mediterranean regions said they would receive the crude they had requested for May-loading, and three others said that they were only approved for allocations below what they had nominated. A further refiner did not ask for any May-loading Saudi crude.

European and Mediterranean interest in May-loading Saudi crude appears to have picked up from the April cycle, when three local refiners abstained from purchases because of unattractive official formula prices. With depressed spot prices for Russian medium-sour Urals crude, Aramco made small adjustments to its May pricing for the European regions — largely rolling over prices for its northwest European customers, barring a 20¢/bl trim for Arab Light, and lowering most Mediterranean prices by 5-30¢/bl on fob Ras Tanura and fob Sidi Kerir sale terms.

Aramco will meet most May requirements in its core Asia-Pacific market, for which it raised official formula prices by 20-50¢/bl from April. Opec+ policy has met some criticism from India, a major regional purchaser of Saudi crude, which has been frustrated by the price effects of output cuts. Indian state-controlled refiners have nominated lower May allocations, in line with government guidelines to reduce their dependence on Mideast Gulf crude.

Aramco's capped European May allocations come as Saudi Arabia prepares to gradually increase output next month. It will return 250,000 b/d of the voluntary 1mn b/d cut that it deducted from its 9.119mn b/d Opec+ quota over February-April, putting Saudi production at around 8.369mn b/d in May.

Saudi Arabia abided by an 8.119mn b/d quota in February and March, when Argus tracking data puts its exports — including its portion of shipments from the Neutral Zone it shares with Kuwait — at 5.69mn b/d and 5.49mn b/d, respectively. Saudi February loadings were just 251,000 b/d under January exports, as Aramco took crude from storage to meet some customer obligations, according to a Saudi source.

Shipments of Saudi crude to destinations west of Suez were 968,000 b/d in February and 806,000 b/d in March. This comprised direct shipments from Saudi ports and crude discharged for transit to Egyptian storage in Sidi Kerir. Most European buyers and some US refiners procure their Saudi crude allocations with Sidi Kerir loading, to bypass the journey from the Mideast Gulf.

By Ruxandra Iordache