SINGAPORE/TOKYO: Saudi Arabia’s offer of additional crude in August drew scant interest from refiners across northeast Asia who declined supplies beyond contracted volumes, while one buyer each in India and Southeast Asia accepted extra barrels of light oil. Ten refiners in China, Japan, South Korea and Taiwan turned down the Saudi offer, traders said on Monday, as oversupply of high-quality Russian ESPO crude prevails in the region and China’s crude imports tumbled 11.5 percent in June from a year earlier to their lowest in eight months. Limited demand for extra barrels from Asia, the world’s fastest-growing market, would leave the Saudis with few options to find homes for additional cargoes. Saudi Aramco was expected to have raised output to near 10 million barrels per day (bpd) in June. “If buyers do not ask for more, I think Aramco will not provide more,” said a trader with one of the northeast Asian refiners. “Maybe they will switch the grade only. Arab Heavy is still tight for summer.” Sources with European oil companies said they would receive the same contracted volumes from Saudi Arabia in August as they did in July. At least one source said Aramco did not actively ask if there would be any additional requirement. “Volume-wise, August is same as July. Everything is according to what we want,” one source with an oil company that had received its allocation, said. “They used to say, ‘if there is any additional requirement, let us know and we can discuss.’ But not recently.” The composition of the kingdom’s exports to Asia is getting lighter. At least three refiners of those receiving steady overall amounts will get more of the lighter crude and less of the heavy grades next month, traders said. Saudi Arabia is aiming to increase exports of light crude to compensate for the disruption to high-quality Libyan oil exports, crimped by the country’s civil war for the past four months. The Kingdom had so far aimed those additional volumes of Arab Extra Light at refiners in the Mediterranean. Oil Minister Ali Al-Naimi recently pledged to meet an expected increase in demand in the third quarter after the Organization of the Petroleum Exporting Countries (OPEC) failed to agree to a collective production increase. The Kingdom’s output in June was expected to be more than 1 million bpd above the May average. Some of the incremental output, typically Arab Light and potentially Arab Heavy, may be staying in the Kingdom to fuel power generation to meet peak summer use. Some traders said the southeast Asian refiner buying more crude was probably Thailand’s PTT, a traditional importer of Abu Dhabi Murban crude from the UAE. A 50-cent drop in the OSP of Arab Extra Light crude in August is rendering the Saudi grade more competitive than Murban, they said. Four buyers took additional July barrels, three in India and one in Japan, and another two will take more in August. Five of the six buyers are outside northeast Asia, the continent’s key market for Russian ESPO crude, which traders have said remains more competitive than Arab Light. Saudi Aramco cut the official selling price (OSP) of flagship export grade Arab Light by a smaller-than-expected 10 cents last week. It raised the Arab Heavy OSP by 75 cents, surprising Asian refiners who had hoped for lower prices as part of the Kingdom’s strategy to sell more in the region. So far, India is the only major Asian buyer consistently asking Saudi Arabia for more oil. Hindustan Petroleum Corp. will ask for extra crude next month, a source at the state-run refiner said.

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