The Battle For European Oil Markets Is Heating Up

Saudi Arabia’s state oil giant Aramco, the world’s largest oil exporter, will meet only part of the nominations for crude from the European and Mediterranean regions for loading in May, refiners have told Argus.

While three refiners have been given all the nominations they had put through, three others will receive crude loading in May below the volumes they had nominated, Argus said.

Saudi Arabia is competing, among others, with Russia’s Urals grade in the European markets.

Earlier this month, Aramco lifted its official selling prices to its most important outlet, the Asian market, but lowered slightly the prices for its crude to Europe and the United States.

Although the Saudis made minor cuts to their prices for the flagship Arab Light grade for May to Europe, Urals crude looks more attractive to European buyers because it is at its lowest price in one year, traders told Bloomberg this week.

While not all European customers will get the crude volumes they had requested, Aramco is set to meet all the requests coming out of Asia, including India, officials notified by the Saudi firm of their requests told Bloomberg.

India has requested less crude from Saudi Arabia for May, in line with its new policy to seek alternatives as it is displeased with the Saudi and OPEC+ management of the oil market with production cuts to keep prices relatively high.

The Saudis will be ramping up their crude oil production in May, both as part of the OPEC+ agreement to gradually raise collective output by over 1 million bpd by July and as part of the gradual reversal of the unilateral extra 1-million-bpd cut Saudi Arabia kept for February, March, and April.

According to some analysts, rising Middle Eastern oil production is making the commodity that comes out of this region cheaper compared to Brent-linked grades, which may lead to a price war.

By Tsvetana Paraskova for Oilprice.com

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