The Strategist

Bloomberg: Refineries in Asia are looking for alternative suppliers after OPEC+ decision

04/04/2023 - 11:03

According to Bloomberg, refineries in Asia were dissatisfied with the unexpected decision of OPEC+ exporters to cut back on oil output, and are considering finding new suppliers.

Flickred! via flickr
Flickred! via flickr
Refineries in Asia were caught off guard by the OPEC+ countries' decision to reduce oil output, and they are ready to diversify their purchases on the spot market if necessary, according to Bloomberg.

OPEC+ exporters unexpectedly declared a 1.16 million bpd production cut on Sunday, April 2. Saudi Arabia reduced production by 500,000 bpd. The choice was taken just before Saudi Aramco released its May official selling prices (OSP).

According to sources, some Chinese refiners have begun considering spot acquisitions from suppliers in West Africa, Latin America, and the US to make up for shortages that might occur if the selling prices of Aramco and other producers rise too much.

Asian refiners will need to "actively seek alternative grades" if Riyadh doesn't reduce prices or even increase them, according to London-based Energy Aspects analyst Jianan Sun. At that, the largest refinery in China's Guangdong province will receive at least 8 million barrels of oil that PetroChina, a state-owned company in China, has already purchased in Canada, Colombia, and Ecuador.