Adds information on European allocations
Saudi Arabia's state-controlled oil firm Saudi Aramco will provide several of its customers in Asia-Pacific and Europe with their requested September term crude volumes, as Riyadh boosts production in line with rising output quotas under the Opec+ agreement.
Seven refiners in Asia-Pacific said they will receive all of their September-loading Saudi term crude nominations. Other regional refiners are also getting their requested volumes, traders said, with no refiner getting below nominated volumes. Most Asia-Pacific refiners had nominated their normal contractual volumes of Saudi crude for September loading, although a few have requested below contractual volumes, probably because of a rise in Aramco's official formula prices. One refiner nominated around 20pc less than its usual term volumes for September and will get what it requested.
At least four buyers in northwest European and the Mediterranean have also been allocated the September volumes they requested, while two others abstained from nominating September supplies because of firm official formula prices. Aramco released its formula prices for September last week, lifting the price of its crude exports to Asia-Pacific by 20-60¢/bl. It is the second straight month that Aramco has raised all its crude prices to Asia-Pacific. The company lowered official September prices to northwest Europe and the Mediterranean by 50-95¢/bl on the month, on fob Ras Tanura and fob Sidi Kerir terms. Some market participants still found the prices unattractive, while others said they were in line with expectations.
Aramco had been expected to provide customers with their requested term volumes as its crude production is due to rise in the coming months. The Opec+ coalition decided last month to raise its collective output target by 400,000 b/d each month from now until April next year, and by 432,000 b/d each month from May 2022 until the rest of the group's cuts have unwound. It means Saudi Arabia's quota will increase to just over 9.7mn b/d in September from 9.6mn b/d this month. Riyadh has been producing well under quota since implementing a voluntary, additional 1mn b/d cut in February, but that reduction has now been fully unwound.
Saudi crude exports — including Riyadh's share of shipments from the Neutral Zone but excluding Bahraini volumes from Saudi terminals — picked up by nearly 630,000 b/d to 6.27mn b/d in July, according to Argus tracking data.
