Abu Dhabi’s ADNOC has told Asian oil buyers that it plans to increase crude allocations in April, sources close to the matter told Reuters ahead of an OPEC+ meeting expected to agree to an easing of production cuts within the producer group.
Having cut its March term supply nominations by 10-15 percent, national oil company ADNOC plans to reduce the cuts to 5 percent next month, the sources said.
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Three Asian refiners said the 5 percent volume cut applies to all four crude grades while two others said they were notified of a 5 percent volume cut for the medium sour grade Upper Zakum. ADNOC also sells Murban, Das and Umm Lulu crude.
ADNOC did not immediately respond to a request for comment.
The decision to raise allocations comes ahead of a March 4 meeting at which the Organization of the Petroleum Exporting Countries (OPEC) and its allies, a grouping known as OPEC+, are expected to discuss a modest easing of oil supply curbs from April.
OPEC+ sources told Reuters a 500,000 barrels per day (bpd) increase from April looked possible without building up inventories.
At the same time, Saudi Arabia’s voluntary cut of 1 million bpd expires at the start of April.
While Riyadh hasn’t shared its plans beyond March, there are growing expectations in OPEC+ that it will bring back the supply from April, perhaps gradually.
“It is widely expected that these voluntary cuts from Saudi Arabia will not be extended, while broad expectations are that OPEC+ will likely ease output cuts by 500,000 bpd,” ING analysts said.
One of the sources said that ADNOC’s move would provide relief for refiners hit by squeezed Middle East supplies after top exporter Saudi Arabia implemented its additional cuts in February and March.
Last month ADNOC notified clients that March term supplies for Upper Zakum crude would be cut by 15 percent, sources said. Term supplies for other grades were reduced by 10 percent.
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