Middle Eastern oil giants clash in market share skirmish


The Middle East’s largest oil exporters are battling for market share in the most prized oil market, Asia, although Asian crude imports have been relatively low over the past three months.

The peak of the Delta variant of the coronavirus and higher Middle Eastern oil prices in summer reduced both Asia’s total crude oil consumption and imports from Gulf producers amid cheaper alternatives .

Chinese and Asian crude imports overall were sluggish in the third quarter of the year, as higher prices, increased surveillance of independent Chinese refiners and the COVID outbreak in the summer hampered purchases.

However, as the fourth quarter approaches, the largest oil producers in the Middle East – Saudi Arabia, the world’s largest oil exporter – have started offering more oil to Asia thanks to the easing of cuts. of OPEC + and the fall in their oil prices to remain competitive and regain the market share lost since the start of the pandemic.

Estimates show that Asian crude oil imports continued to be unimpressive in September, as higher benchmarks and higher official selling prices (OSPs) from major Middle Eastern producers coincided with a surge in cases. COVID by the time the September shipments were designated in June. and July.

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China’s crude oil imports are estimated to have fallen to an average of 9.62 million barrels per day (bpd) in September, down 8.6% from the previous month, according to data from supplier d OilX energy analysis. Chinese crude imports last month continued to be burdened by tighter monitoring of imports, refining operations and refiners’ market practices. In addition, Chinese economic activity moderated in September, further depressing crude oil imports, OilX oil analysts noted.

According to data from Refinitiv Oil Research cited by Reuters columnist Clyde Russell, total oil imports in Asia fell to 22.99 million bpd in September, from 23.24 million bpd in August. Asia’s crude imports in September were only slightly higher than July’s imports of 22.61 million barrels per day.

Rising prices were partly responsible for lower purchases in the third quarter, as well as weaker fuel demand in Asia amid localized bottlenecks to combat the Delta variant.

The Saudis raised their September prices in August, but had to compete with cheaper alternative crudes from the United States and Russia as Asia, including China, battled the resurgence of COVID.

International benchmarks continued to rise at the start of the fourth quarter, but Saudi Arabia cut its Asia PSOs for November, in a second consecutive price cut, to keep its crude competitive. in the main oil importing region.

In early October, Saudi Arabia reduced its OSPs for Asia for November by $ 0.40 per barrel for its flagship Arab Light grade, to a premium of $ 1.30 above the Dubai / Oman benchmark, the lowest premium since March.

This was the second Saudi price drop in two consecutive months, after the price hike sparked by OPEC + ‘s decision to stick to monthly additions of 400,000 bpd rather than increase more production to cap international prices.

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Saudi Arabia, which typically sets PSO price trends for other major Middle Eastern oil exporters, is now fighting for market share in the prized Asian market by lowering its crude prices.

Saudi Arabia is also expected to ship additional volumes of crude to at least three refiners in Asia in November, some of whom had requested full or phased supply in addition to contracted volumes due to attractive prices, sources close to the Chinese government told Reuters. case. this week.

The United Arab Emirates (UAE), through its Abu Dhabi National Oil Company (ADNOC), plans to ship full volumes to customers in Asia in December, without reducing contract term supply for the first time since the fall prices last year, other sources told Reuters last month.

With the gradual easing of OPEC + cuts, major oil producers in the Middle East are now offering more supply at more competitive prices to Asia in a bid to secure a larger share of the oil market the most important in the world.

By Tsvetana Paraskova for OilUSD

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