Saudi Arabia, the world’s largest oil exporter, has notified some refiners in Asia that it will supply full contractual volumes of crude in May, four sources with direct knowledge of the matter said on Friday.
State-run Saudi Aramco said on Friday it would supply customers in the kingdom and abroad with about 8.5 million barrels per day (bpd) of crude, reducing output in line with a global pact on reducing production to cope with falling demand.
OPEC and allies including Russia, a group known as OPEC+, have agreed to cut output by 9.7 million bpd in May and June after oil prices hit 18-year lows amid a supply glut due to the coronavirus outbreak.
Saudi Arabia, the world’s top oil exporter, is expected to cut production by 2.5 million bpd in May and June from a baseline of 11 million bpd, under terms of the supply deal.
Saudi Aramco has made deep price reductions for crude it sells to Asia in May after fuel demand and complex refining margins in Singapore slumped.
The price gap for Arab Light and Arab Heavy is at its narrowest ever at 10 cents a barrel, traders said, reflecting poor demand for light grades, which yield more gasoline and naphtha, products that have been badly hit by government measures to fight the virus outbreak.
The narrow price difference may encourage some refiners to process more light crude, one of the sources said.