Saudi Aramco allocates full term volumes to most Asian refiners for July: refiners

Saudi Aramco has allocated most Asia-Pacific refiners with their requested term crude volumes for loading in July, although some buyers nominated lesser volumes amid demand concerns, refiners told S&P Global Platts.

The allocation of full volumes is largely in line with market expectations, with Saudi plans to raise supplies post the OPEC+ group's decision to ease production cuts amid firming demand cues aided by the global recovery.

In the group's meeting on June 1, OPEC and its allies decided to follow through on plans to hike crude production through July.

"Normal allocations [as] Saudi saw the market is fine [and] they produced more. I don't see any further market changes to the Saudi announcement [for term allocations]," said a trader with a North Asian refinery.

Some Asian refiners were heard to have nominated lesser volumes amid rising official selling prices and COVID-19-related demand concerns, traders said.

"We nominated lower, though. I think Southeast Asian [markets are] still struggling," said a trader with a Southeast Asian refinery, indicating the impact of extended lockdowns, which continue to throttle demand.

Countries such as Thailand and Malaysia are still in the grip of the virus, which has dented demand in the region despite the demand recovery in parts of Asia.

But lower demand from Southeast Asia is unlikely to dent the sentiment for July-loading spot barrels this month as the crude import appetite from India, China and Japan remains steady.

"Last month, India's virus cases did not impact the market in a huge way. Malaysia's lockdown is actually an extension, so don't see their lockdowns affecting the market much," said the trader with the North Asian refinery.

Meanwhile, higher official selling prices by Saudi Aramco and other Middle East producers could also affect demand for term barrels, some traders said.

Saudi Aramco raised prices for its July Asia-bound crude by 10-50 cents/b with stronger hikes for lighter grades, to levels higher than market expectations, Platts reported earlier.