Saudi Arabia is holding on to its previous pledge to cut oil production as part of the agreements with oil cartel OPEC and allies (OPEC +). As a result, deliveries to certain countries in Asia will decrease.
Contract volumes declined for at least twelve countries in the region for June, traders reported. Three regional buyers will receive what they asked for. Saudi Aramco was not yet available for comment.
The cuts were widely expected as the world’s largest oil exporter announced a few days ago that it would cut production by another 1 million barrels a day. This reduction is in addition to the commitments under the OPEC + agreement. It also discussed restraining oil supplies to Asia.
Reportedly, buyers in China and India in particular should make do with fewer deliveries. The allocation announcement of the Saudis is later than normal because there had previously been a delay in the release of official sales prices. Surprisingly, a price increase applied to Asian countries.
The decline in oil supply in Asia coincides with an improvement in demand. The Chinese economy is slowly recovering and consumption in India also seems to be recovering.