Saudi Arabia will cut oil supplies to some of its buyers for February after the kingdom agreed under the OPEC+ deal to voluntarily increase the volume of oil production cuts in the next two months, Report mentions, citing Bloomberg.
"Saudi Arabia slashed crude oil supplies to at least nine refiners in Asia and Europe after the kingdom volunteered to cut its production by 1 million barrels a day for February and March," the agency writes.
Next month, Saudi Aramco's supply under long-term contracts will decline, with some Asian refineries receiving 20-30% less than they requested. The agency refers to representatives of companies that have received relevant notifications.
Across Asia, refiners had been anxiously awaiting Aramco's release of so-called allocations for February on expectations of tighter supply. The size of Saudi Arabia's pledged curbs was larger than the market had anticipated, coming on top of Abu Dhabi's move to cut Asian term volumes for critical grades by 20% next month.
Despite lower crude demand due to maintenance closures across Asia and thin margins, regional processors that were hit by supply cuts may seek prompt spot cargoes -- some shipments are still available from last month -- to make up for shortfalls. Other alternatives include short-haul Russian barrels such as ESPO and Sokol for March loading to reach North Asia in less than a week.