Saudi Arabia Has Promised A Big Increase In Crude Oil Supplies To European Refiners
London, March 12 (world petroleum) -- Saudi Arabia is sending a wave of crude to Europe, promising to supply three times as much oil to the region's refineries as it normally imports from Saudi Arabia.
Saudi crude shipments, combined with unprecedented discounts, are turning the European oil market into the fiercest tussle in the increasingly bitter battle between Saudi Arabia and Russia over the price of oil. Saudi Arabia supplies Rotterdam with its flagship Arab light crude at about $25 a barrel, well below the price of Russia's urals.
European refiners, including royal Dutch shell, BP, total, OMV, repsol and Cepsa, have received far higher allocations from the state-owned Saudi aramco, according to people familiar with the matter. Depending on the company, the range of additional supplies is between 25 per cent and 200 per cent, these people said.
Amrita Sen, chief oil analyst at Energy Aspects, a consultancy, said in a note to clients that the Saudi price cut was so steep that Arab light would 'squeeze out the recipe' for refiners in the urals and other regions unless their relative prices also fell.
Aramco confirmed the increase to European oil companies on Wednesday, these people said. A major European refiner received twice the normal quota, according to a person familiar with the matter.
Saudi aramco announced on Tuesday that it would increase output to 12.3m b/d in April. Just days earlier, the company had enticed refiners to buy more crude with a record price cut and formally cut the official selling price, which is a discount or premium to Saudi Arabia's selling price relative to the regional benchmark.
The increase, more than 25 per cent higher than last month's output, puts aramco's capacity beyond its maximum sustainable capacity and suggests the kingdom is even tapping its strategic stockpiles to dump as much crude as possible on the market as quickly as possible.
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