Saudi Arabia has reduced contractual crude supplies to some customers in Japan and South Korea since March by trimming the volumes of oil loaded, six industry sources familiar with the matter said.
The move, which is limited to some buyers in North Asia, came even as output by the world’s top crude exporter hit a record in March after it pledged late last year to keep production unchanged to defend its market share.
A source with knowledge of the producer’s operations said that Saudi Arabia had over allocated crude in January and February, adding that requirements for its oil had exceeded 10 million barrels per day (mbpd) since the start of the year.
For the past two months, the Opec producer had informed some customers that they would receive full contracted volumes, only to trim supply later using a contractual term known as operational tolerance, the sources said.
Under oil contracts, the seller or the buyer can adjust loading volumes, depending on demand and shipping logistics, using operational tolerance which ranges from plus to minus 10 per cent of the contracted Saudi volume.
Saudi Aramco will supply full contracted volumes of crude oil to at least three Asian term buyers in May, unchanged from April, the sources said, but added that the producer hadn’t informed them of the operational tolerance levels for the month.
Another Opec producer, the UAE, has also trimmed supplies to Asia as it diverts more oil for use at a new refinery.
