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MEOG PiPeLines & tRansPoRt MEOG
Saudi slashes Asia exports by 2mn bpd
saudi
SAUDI Arabia’s oil giant Aramco will be sending 4mn barrels per day of its crude to Asia in May, down from the full contractual volumes of 6mn bpd, a Saudi source with knowledge of Aramco’s plans told Reuters on Friday.
“The full contractual volumes to Asia are about 6mn bpd. What Aramco has allocated is whatwasnominated,whichisaround4mnbpd,” the Saudi source told Reuters.
Earlier on Friday, other sources in Saudi Ara- bia had told Reuters that Saudi Aramco would be sending the full 6mn bpd contractual volumes to its customers in Asia.
The lower allocations, due to the nominations of around 4mn bpd, as per the Saudi source, sug- gest on the one hand that Saudi Arabia is low- ering its oil supply to the market in line with its commitment to the new OPEC+ deal; on the other hand, the lower nominations from Asian customers suggest that despite the deep dis- counts for Saudi crude sold to Asia, demand for crude is still lower than usual volumes.
At the beginning of this week, Aramco announced the pricing for its oil for May, offering
deeper discounts to customers in Asia for the second month in a row, despite Sunday’s historic global production cut deal — a sign that the Kingdom is still fighting for market share in Asia even after the formal end to the price war.
Under the new OPEC+ agreement, Saudi Arabia has pledged to reduce the oil it sells to the market to 8.5mn bpd in May and June from a baseline of 11mn bpd.
The market and analysts, however, see the new deal as ‘too little, too late’ to make a mean- ingful impact on rising global inventories amid crashing demand.
On Thursday, the energy ministers of Saudi Arabia and Russia, Prince Abdulaziz bin Sal- man and Alexander Novak respectively, held a phone conversation and issued a statement, via the Saudi Press Agency, that “both our nations are strongly committed to implement the agreed target cuts over the next two years and will con- tinue to closely monitor the oil market and are prepared to take further measures jointly with OPEC+ and other producers if these are deemed necessary.”™
Supertankers drafted in to store glut of crude
maRket
ShIPS able to carry 2m barrels chartered for $335,000 a day are to store unwanted oil during the Covid-19 pandemic. Giant oil tankers are being used to hold record amounts of crude at sea due to a global oversupply that threatens to overwhelm the world’s storage facilities.
A record 160m barrels of oil has been stored in “supergiant” oil tankers outside the world’s largest shipping ports following the deepest fall in oil demand in 25 years because of the corona- virus pandemic.
The supertankers, which can each hold up to 2m barrels of oil, are in high demand by oil traders as conventional oil storage facilities have quickly filled up with oil left unused during the coronavirus lockdown.
The last time floating storage reached levels close to this was in 2009, when traders stored more than 100m barrels at sea before offload- ing stocks when the world economy began to recover. Charter rates for giant vessels that can be used to store oil have more than doubled in the last month to reach highs of $350,000 (£280,000) a day as traders scramble to find space for crude that cannot be sold on to refineries.
Shipping experts told the Reuters news agency that 60 supertankers have been chartered to store oil, mostly off the coast of Singapore and in the US gulf coast, as well as smaller crude oil tankers. The number has climbed quickly from 10 super-large vessels in February and between
25 and 40 at the start of the month. The number may triple in the coming months to fill up to 200 supertankers, according to the shipping experts.
Commodity traders are hunting for extra space to store their crude as demand for oil collapses by 29m barrels per day in April com- pared with last year, falling to lows not seen since 1995. The traders are understood to be storing the excess crude in the hope it can be sold at a profit when demand for transport fuels returns later this year. The slump in demand has created an oversupply of 9m barrels a day in the global market which threatens to swamp the world’s traditional oil storage within weeks, according to S&P Global Platts Analytics.
The analysts expect a “massive” increase in oil storage of between 500m to 1bn barrels of oil compared with stock levels at the end of Febru- ary, which could fill global storage facilities to the brim by May.
This situation has triggered an oil market collapse well below $30 and potentially between $10 to $20 a barrel in the second quarter of the year – from about $65 a barrel at the start of the year – and force oil producers to shut their wells.
Platts expects an oil market recovery to be “largely delayed” until next year even after the world’s largest oil producers struck the most ambitious supply deal in history to cut up to 20% of world’s output from next month to ease the global glut.™
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w w w . N E W S B A S E . c o m Week 16 22•April•2020