finance
Asian Refiners Cut Spot Purchases of Middle East Crude for June and July
Asian buyers have reduced spot orders of UAE, Saudi, and Iraqi crude after a three-week period of heavy purchases. High freight and insurance costs linked to Strait of Hormuz uncertainty have reduced the price advantage of Middle Eastern grades.
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Asian refiners have reduced spot purchases of Middle East crude scheduled for loading in June and July after buying millions of barrels of UAE, Saudi, and Iraqi grades over the preceding three weeks. Traders told Bloomberg that most June and July cargo orders are already secured.
High freight and insurance costs tied to uncertainty over the Strait of Hormuz have offset the benefit of lower Dubai, Murban, and Oman prices.
For the past four months Asian refiners had sought crude supplies from sources outside the Middle East. Buyers now hold sufficient non-Middle Eastern volumes for the next two months, reducing the need for immediate spot purchases from Gulf producers.
Kuwait plans to reach 2 million barrels per day within one week.
Iraq aims to restore output to 3 million barrels per day within two months. Iran has offered crude to buyers in India, South Korea, and Japan under a two-month arrangement. Middle Eastern producers would need to offer significant price discounts to stimulate renewed spot buying from Asia, according to the same traders.
