SINGAPORE/SEOUL (Reuters) – At least three North Asian buyers will receive extra supplies of oil from Saudi Arabia after the kingdom cut its prices for most grades in October and as they look to cushion the impact on supply of U.S. sanctions on Iran, sources said.
Buyers have asked to lift more Saudi oil than contracted volumes in October amid fears that the sanctions, to be imposed on Iran’s crude exports from Nov. 4, will crimp supply during peak winter demand in Asia, the sources said.
Saudi Aramco will supply more oil to the buyers in October, with one to receive more Arab Light crude, the sources said. They declined to be identified as they were not authorized to speak with media.
State-owned Saudi Aramco has yet to respond to a request for comment.
Washington has asked buyers of Iranian oil to cut imports to zero in the run up to early November to force Tehran to negotiate a new nuclear agreement and to curb its influence in the Middle East.
Concerns over supply from the country have driven Middle East crude benchmarks to their highest in more than a year. [CRU/M]
A strong Brent price has also made oil from Europe and Africa more expensive for Asian refiners, while the U.S.-China trade war has sharply reduced China’s oil imports from the United States.
But Saudi Aramco last week cut its official selling prices (OSPs) for most of the crude grades it sells to Asia in October, making Saudi oil competitive.
Saudi Arabia, the world’s top crude oil exporter, and other producers from the Middle East and Russia have increased exports after a June meeting where they agreed to raise output by 1 million barrels per day. The rise in supply is to replace falling exports from Venezuela and Iran.
“They can provide more supplies as there is no more OPEC cut,” a veteran Asian crude trader said.
“It’s a very good chance for these producers to take back some market share.”
In Asia, South Korea has stopped lifting Iranian oil since July. Japanese and Taiwanese buyers are expected to lift their last Iranian oil cargoes this month, the sources said.
It is still unclear if top buyers China and India will cut imports from Iran sharply.
Reporting by Florence Tan in SINGAPORE and Jane Chung in SEOUL; Additional reporting by Rania El-Gamal in DUBAI; Editing by Christian Schmollinger and Joseph Radford