Middle East crude benchmark Oman’s premium rose above $4 a barrel to a six-month high on Thursday, with trading for October-loading cargoes closed for the month at higher levels versus last month on robust demand in Asia despite rising supply from OPEC producers.
RUSSIA OIL
Indian state refiners have stopped buying Russian oil in the past week as discounts narrowed this month and U.S. President Donald Trump warned against purchasing oil from Moscow, industry sources said.
The country’s state refiners – Indian Oil Corp, Hindustan Petroleum Corp, Bharat Petroleum Corp and Mangalore Refinery Petrochemical Ltd – have not sought Russian crude in the past week or so, four sources familiar with the refiners’ purchase plans told Reuters.
The four refiners regularly buy Russian oil on a delivered basis and have turned to spot markets for replacement supply – mostly Middle Eastern grades such as Abu Dhabi’s Murban crude and West African oil, sources said.
IOC is in talks to buy more crude for late September to October delivery via a tender which closes on Friday, traders said.
Earlier this week, IOC bought 1 million barrels of Murban from BP, and 1 million barrels each of Agbami and Nemba crude from Chevron for October delivery via a tender, they said.
Separately, premiums for ESPO Blend crude oil loading from Russia’s Kozmino port in late August to early September for delivery into China have held firm as buyers seeking to meet robust demand ignore the threat of increased U.S. tariffs, four traders said on Wednesday.
ARBITRAGE
Asia is expected to step up imports of U.S. West Texas Intermediate crude in the fourth quarter after Middle East oil prices strengthened and opened the arbitrage window, trade sources said.
U.S. producer Occidental has sold WTI crude to Japanese refiner Taiyo Oil, the sources said. The cargo was sold at a premium of about $3.50 a barrel to October Dubai quotes for October delivery, one of the sources said.
WTI crude could be delivered at 50-75 cents a barrel lower versus similar quality Murban oil to North Asian refiners depending on suppliers, a Singapore-based trader said.
Two other traders said WTI is at least 30 cents cheaper than the light-sour Murban grade.
Falling costs for a very large crude carrier to send 2 million barrels of crude from the U.S. Gulf Coast to Asia are also enabling the trade.
The costs for a VLCC to ship U.S. crude to China, Singapore and the western cost of India fell $200,000 to $6.5 million, $5.5 million and $5.35 million, respectively, on Wednesday, SSY’s daily tanker rates on LSEG Workspace showed.
SINGAPORE CASH DEALS
Cash Dubai’s premium to swaps rose 3 cents to $3.13 a barrel. PetroChina will deliver a September-loading Upper Zakum crude cargo to Vitol following the deals.
Source: Reuters