Asian crude oil buyers are increasingly seeking for cheaper US supply as OPEC producers are sticking to their plan to reduce supply to rebalance the market. OPEC suppliers, such as Saudi Arabia and Iraq, have lowered volumes and increased pricing for their Asian importers in the past couple of months.
As a result, Asian crude processors are increasingly looking for US crude oil, especially as rates for trans-Pacific freight have fallen over the last couple of months. US WTI Midland is also comparable to Saudi Arabia’s Arab Extra Light and Arab Light, Abu Dhabi’s Murban and Das Blend, as well as Russia’s Sokol.
The spot premium to purchase Murban has increased by $4/barrel against its benchmark, compared to a $2/barrel premium to buy WTI Midland. At the same time, VLCC costs for USGC-China route have declined from $15 million in late April to $7.5 million in mid-June.
US oil cargoes scheduled to arrive in Asia in July rose to about 49 million barrels from around 27 million barrels in May and June, trading sources said. China’s Rongsheng Petrochemical Co. as well as South Korea’s GS Caltex Corp. and SK Innovation Co. were among buyers of US grades including WTI Midland and Eagle Ford for August-September arrivals.
