State oil giant Saudi Aramco has agreed to supply some customers in Asia with incremental crude that will load in January, as it holds to a strategy of maintaining market share, reported Reuters.
The decision by the world’s top exporter to give extra oil came weeks before Saudi Aramco was due to notify customers of their monthly supply allocation. For January supplies, allocations would have been made only during the first ten days of the month, according to Agraam.
Demand for Saudi Arab Extra Light crude has been robust in Asia because of its competitive pricing and its higher yield of naphtha, which is used to produce petrochemicals. By exercising flexibility to meet customers’ demand, Saudi Arabia is signaling that it won’t budge on market share even as it works with members of the Organization of Petroleum Exporting Countries (OPEC) to finalize plans for a production cut at the late November meeting.
The excess Saudi supplies, combined with a rise in arbitrage inflow from Europe and the United States, have depressed Asia’s demand for similar quality light sour crude such as those from Abu Dhabi.