Chinese refiners have reportedly reduced their demand for crude oil from Saudi Aramco for January, marking the lowest nomination volume in five months. Approximately 40 million barrels were nominated for January loading, down from about 46 million in December. The decline in demand is attributed to higher-than-expected prices, prompting buyers to seek more cost-effective alternatives. Despite Saudi Arabia's voluntary commitment to maintain its crude output cut of 1 million barrels per day into the first quarter of 2024, Aramco has notified some North Asian buyers that it will supply full contractual volumes in January. The January official oil prices to Asia set by the kingdom were notably higher than market expectations, contributing to a divergence in prices for similar grades. Spot premiums for medium sour Oman crude and light sour Murban crude have averaged around $0.50 to $0.60 per barrel over Dubai quotes this month, reaching their lowest levels in almost three years. The narrower spread between Brent- and Dubai-pegged oil makes hauling arbitrage cargoes from further afield more economical for Asian refiners, which in turn dampens demand for relatively expensive Saudi crude. While there is consideration among some refineries to reduce supply volumes, maintaining good relations with Saudi Arabia for energy security reasons presents a challenge. Refiners in other North Asian countries, despite the high Saudi prices, have not reportedly sought lower nominations.

SOURCE:GOOGLE