Tokyo — Japan's second largest refiner Idemitsu Kosan said Jan. 6 that it does not see an immediate impact on its crude oil procurement from Saudi Arabia for the February and March loading programs, following the kingdom's announcement Jan. 5 of an additional output cut of 1 million b/d.
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"At this moment, we do not see an impact on our Saudi crude oil procurement for February-March loadings," an Idemitsu spokesman said.
Saudi Aramco has a 7.76% stake in Idemitsu Kosan as the second largest shareholder after the Idemitsu founding family.
Similarly, Japan's ENEOS said Jan. 6 that the country's largest refiner does not see an impact on its crude procurement following the Saudi output cut announcement.
Saudi Arabia is by far the largest crude supplier to Japan, which procured 1.01 million b/d from the producer in November, accounting for more than 43% of its crude requirements in the month, Ministry of Economy, Trade and Industry data showed.
Crude oil futures rose during mid-morning Asian trade Jan. 6, as the market was exuberant after Saudi Arabia announced that it will unilaterally cut output by 1 million b/d in February and March, with a weaker US dollar and a draw in US crude inventories also boosting prices.
At 10:48 am Singapore time (0248 GMT), the ICE Brent March contract was up 48 cents/b (0.89%) from the Jan. 5 settle to $54.08/b, while the February NYMEX light sweet crude contract was up 29 cents/b (0.58%) at $50.22/b. Both markers had jumped by 4.91% and 4.85% on Jan. 5 to settle at $53.60/b and $49.93/b, respectively.
Saudi Arabia has delivered what Russian Deputy Prime Minister Alexander Novak called "a New Year's gift" to the oil market with its surprise announcement of an extra 1 million b/d production cut, blowing away expectations that the OPEC+ alliance would merely roll over its collective output ceiling.
Saudi Arabia will hold its February and March crude production to 8.119 million b/d, well below its quota of 9.119 million b/d, to help bring down oil inventories that had bloated from the pandemic, energy minister Prince Abdulaziz bin Salman said Jan. 5, after two days of OPEC+ talks.
The OPEC+ alliance, which controls roughly half of the world's crude production, implemented production cuts totaling 7.2 million b/d in January and was planning on adjusting quotas monthly as market conditions warrant.
The agreement now locks in quotas through the first quarter, with the group's next meeting set for March 4 to set April levels.
Including the extra Saudi cut, the 19 members with quotas under the OPEC+ agreement will see their total production capped at 35.728 million b/d in February, an
8.125 million b/d cut from October 2018 levels.
For March, the ceiling will edge up to 35.803 million b/d, an 8.050 million b/d cut.