Saudis to supply full oil volumes to Asia in August, China requests less again

(Reuters) – Saudi Aramco  has informed some clients in North Asia they will receive full nominated volumes of crude oil in August, several sources with knowledge of the matter said on Tuesday, while top buyer China once again requested for less supply.

The world’s biggest oil exporter last week said it would extend its 1 million barrels-per-day (bpd) output cut by another month to August and hiked the prices for most of the crude grades it sends to Asian customers for a second month.

Some Chinese refiners, however, both state-owned and mega-sized independent refineries, have asked for lower supply in August, according to four trading sources.

The sources estimated the combined volume could be about 8 million barrels less than they took for July.

China’s intake of the kingdom’s crude was at a low base in June and July as refineries were seeking cheaper alternatives from the spot market in response to high Saudi oil prices.

Chinese refiners are expected to buy more arbitrage cargoes from West African and Latin American regions as the spread between Brent- and Dubai-pegged oil narrows.

Meanwhile, China’s onshore commercial crude oil inventory reached about 980 million barrels by end-June, about 20 million barrels shy of a historical high set in August 2020, according to data analytic firm Vortexa.