Aramco gives full term crude to Asian buyers: Update

Adds information on NW European and Mediterranean allocations, details on Saudi exports

Saudi Arabia's state-controlled Saudi Aramco will provide refiners in Asia-Pacific and several of its European customers with their requested crude supplies for July loading, as Riyadh unwinds its additional 1mn b/d output cut.

At least five refiners in northeast Asia and south Asia said they will receive their July-loading Saudi term crude nominations. Other refiners in the region are also getting full allocations, traders said, with no word of any refiner getting a supply cut. Most will get the grades they requested, although one may get slightly more of the lighter Saudi grades.

Meanwhile in northwest Europe and the Mediterranean, five refiners said they will receive the July-loading volumes of Saudi crude that they have nominated. One buyer in the region has been awarded less than requested, while another abstained from nominating because of increased official formula prices for Saudi grades.

Last week Aramco raised formula prices of most of its crude exports for customers in Asia-Pacific by 10-50¢/bl. Only the July price of Arab Heavy was reduced, down by 10¢/bl from June. Aramco also lifted prices for clients in northwest Europe and the Mediterranean, with the increases ranging from 40¢/bl to $1.40/bl.

The bolstered Saudi allocations follow last week's decison by the Opec+ group to stick with its plan to increase crude output quotas in June and July. As agreed in April, the group's collective production ceiling rose by 350,000 b/d in May and will go up by another 350,000 b/d this month and by 441,000 b/d in July. These increases coincide with Saudi Arabia's plan to gradually relax its additional 1mn b/d output cut over the same period.

Between Saudi Arabia's share of the official Opec+ quota increase and the unwinding of its unilateral cut, Riyadh's output ceiling will rise by around 550,000 b/d from June to just under 9.5mn b/d in July. The output hike will not necessarily translate into a commensurate increase in exports, as Saudi Arabia faces higher domestic crude demand for air conditioning during the warmer months. The country's direct crude burn averaged 607,000 b/d in June-September last year, peaking at 702,000 b/d in August, according to Riyadh's submission to the Joint Organisations Data Initiative (Jodi). This compares with an average of 330,000 b/d in January-May 2020.

Saudi crude exports topped 5.9mn b/d last month for the first time since January, according to preliminary Argus tracking data. Loadings of Saudi crude — including Riyadh's share of supply from the Neutral Zone which its shares with Kuwait, and discounting Bahraini exports from Saudi terminals — rose by 335,000 b/d from April to 5.93mn b/d in May. Similarly adjusted Saudi crude loadings averaged 5.59mn b/d during February-April when Riyadh was implementing its 1mn b/d unilateral cut, a rate likely sustained through stock draws.

By Fabian Ng and Ruxandra Iordache