Asia buys less Saudi crude as COVID restrictions return

Some Asian refiners named lower-than-normal crude oil volumes from Saudi Arabia in September, as authorities in China and the rest of Asia reimposed restrictions to combat the Delta variant push, have officials from four refineries said. Bloomberg.

Aramco informed those four refineries – one in Southeast Asia and three in Northeast Asia – that it would ship the crude they requested, officials told Bloomberg.

China Petroleum & Chemical Corporation, or Sinopec, is set to cut production rates at refineries at some of its facilities by as much as 10% amid renewed travel restrictions in China to tackle a wave of COVID, an analyst said. research on raw materials. Bloomberg in an interview on Tuesday.

Shanghai-based commodities researcher Jean Zou, analyst at ICIS-China, China’s largest refiner Sinopec is expected to cut production rates at some refineries by 5-10% in August, compared to previous plans for throughput of this month.

China has imposed widespread travel restrictions in major cities, including Beijing, over the past two weeks to contain a resurgence of Delta variant COVID cases. As in the previous outbreak, which China quelled with a complete lockdown, the increase in infections is affecting movement and, therefore, fuel consumption.

China’s 20 largest airports have seen flight departures fall to just 40% of 2019 levels in the past week, BloombergNEF noted earlier this week.

“The sharp drop in traffic will weigh heavily on road fuel consumption, forcing producers like Sinopec and PetroChina to cut refining rates,” said Luxi Hong, Beijing-based analyst at BNEF, in a note released by Bloomberg. .

Refiners in Asia are also grappling with below-average margins, especially after Saudi Aramco last week raised its official selling prices for loading crude oil for Asia in September to the highest premiums by compared to references since February 2020.

By Tsvetana Paraskova for OilUSD

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Felix J. Dixon