Two industry sources said US buyers of Saudi Arabian crude oil cancelled at least seven April-loading tankers after a jump in freight costs. This will trigger the kingdom’s lower-than-expected crude exports.
Crude prices slid to below $16 a barrel this month. Some of the buyers are not rushing to take extra oil, indicated by this move. Saudi Arabia’s official selling prices for April crude had been slashed in March. The kingdom vowed to boost exports after a supply cut deal by the OPEC and rivals like Russia collapsed. However, freight rates soared and because of extraordinary conditions in the freight market, buyers were told that Saudi Arabia would cut compensation payments for freight costs.
After Saudi Arabia and other Middle East producers ramped up output, more ships were needed to deliver oil, resulting in rising freight costs globally. Crude exports to all destinations from Saudi Arabia are expected to rise this month.
