Page 10 - AsianOil Week 20 2022

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Saudi Arabia cuts

crude export prices

to Asia, Kuwait

follows suit

POLICY WHEN Saudi Aramco cut its export prices on
crude shipments to Asian countries last week,
analysts wasted no time in attributing this first
reduction in prices in four months to ongoing
lockdowns across China related to coronavirus
(COVID-19) outbreaks.
Kuwait then took similar action, in the pro-
cess becoming the second-largest OPEC+
member to slash prices on crude destined for
Asian markets in June, and possibly beyond.
Prices of Kuwaiti oil exports had hit record-
high levels earlier this month.
Exporters in both countries have recently energy security seen as more pressing as the
appeared worried over the lack of demand in warmer summer months approach.
China throughout much of the second quar- In Taiwan, where power cuts are becoming
ter. At present tens of millions of Chinese peo- increasingly common, the relatively minor mar-
ple are being locked into apartment buildings ket for Middle Eastern crude has seen price cuts
and images of deserted city streets in major passed on to the general populace. As elsewhere,
cities, Shanghai and Beijing included, are now this has primarily been realised in the form of a
commonplace. decrease in prices at the pump.
As a result, several sources have reported Overall, shipments from Saudi Arabia remain
Saudi Aramco pushing prices down by over $5 high, though. Shipment averages in March have
per barrel for its Super Light crude heading to now been released, coming in at just over 7.2mn
Asia next month. Extra Light prices were also barrels per day (bpd).
reduced by $4.95, according to the same sources. A month earlier the number had passed the
The same cuts were not applied elsewhere. 7mn bpd mark for the first time since early 2020,
Prices on upcoming shipments to the US remain when COVID-19 was just starting to affect
Around 60% unchanged at $5.65 above the Argus Sour Crude economies around the world.
As such, with much of Europe and the US
Index (ASCI). Europe, however, did see prices
of all Saudi oil go down by $2-$3 per barrel. now shifting focus away from the pandemic, the
Around 60% of all Saudi oil exports is sent full effects of China’s lockdown on Middle East-
exports is sent to Asia. Much goes to China, but Japan, South ern exports will only be revealed in the coming
to Asia. Much Korea and India are also large-scale importers. months.
Saudi Arabia at least has moved to increase
While the cuts demonstrate the importance of
goes to China, the Asian markets to Middle Eastern exporters, its crude production rate by over 100,000 bpd
each month under an OPEC+ deal to guaran-
there is now speculation in Asia that leverag-
but Japan, South ing the possibility of future imports of Russian tee global supply. But whether or not Chinese
Korea and India crude may help push Middle Eastern prices demand will increase any time soon is part of a
down even further.
“complicated and grave” situation, according to
For many smaller consumers of Saudi and Premier Li Keqiang.
are also large- other Middle Eastern countries’ crude, this Currently in China, factories are closed and
scale importers. remains a sensitive political ploy if realised. supply chains have ground to a halt.
Japan is a stand-out in much of East Asia in
“It’s obviously a terrible situation for citizens
this regard, having publicly agreed to phase out of Shanghai, and entire parts of Beijing have
imports of Russian oil. been told to work from home,” one analyst said
This stance was heavily publicised a week on a Gulf Intelligence podcast this month. “But
ago as Tokyo seeks to abide by international it hasn’t spiralled or snowballed into something
sanctions. really, really dramatic. Therefore, people have
Elsewhere in the region, there is less attention not worsened their demand-loss projections
being paid to events in Ukraine, with domestic from China,” the analyst added.™

P10 www. NEWSBASE .com Week 20 20•May•2022