Saudis Tell Oil Buyers They’ll Still Get Contracted Volume – In Heavier Grades

Saudi Aramco has told several major Asian buyers that it will supply customers with all contracted oil volumes in spite of the production cuts – but in different grades, according to people with knowledge of the matter.

The attack on the kingdom’s most important oil production facility halved Saudi output and is crimping the availability of lighter grades such as Arab Extra Light and Arab Light. Those less-sulfurous grades are already in high demand due to new rules mandating a switch to cleaner shipping fuel.

Aramco has told customers it’s likely to replace the lighter grades with heavier oil, said the people, who asked not to be identified as the information is private. A North Asian refiner was notified it may get Arab Medium or Arab Heavy crude cargoes instead of the lighter varieties. Aramco also told some Chinese buyers that volumes won’t be affected but grades may differ.

Bharat Petroleum Corp., India’s second-biggest state-run processor, has been informed by Saudi Aramco that it doesn’t foresee supply disruptions, Refineries Director R. Ramachandran said in a phone interview. However, the Saudi company has asked for flexibility in terms of switching to different grades, he said.

Aramco has previously changed the mix of varieties supplied via term contracts at times of unplanned outages in Saudi Arabia and elsewhere. Last year, it gave BPCL the flexibility to take more Arab Extra Light oil when one of the Indian company’s units was shut after a fire.


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