Saudi reduce supply to major buyer

Ahead of OPEC's meeting next week, Saudi Arabia has announced it is set to reduce crude oil supply to a major Asian buyer in April. This cut to a major player is the first since 2009, but Saudi Arabia are keen to alliterate that it will keep full contracted volumes to others.

The world's top oil exporter will supply crude oil at 10 percent below nominated volumes next month to a big refiner in northeast Asia, versus full nominated levels in March, industry sources said on Wednesday, Arabian Business reported. The cut will apply to all light, medium and heavy grades, it added.

The last time Saudi Arabia cut term supply to another major Asian buyer was in November, by up to 20 percent.

For most of 2009, Saudi Arabia curbed supplies in line with OPEC agreements, but since January, it has supplied most Asian buyers with full contracted volumes.

Sources at two European oil companies said Saudi Arabia would keep April volumes steady. Industry players in Asia had expected full allocations from Saudi Arabia in April like in previous months, but they were surprised by the supply cut to the single major buyer and could not explain the reason.

OPEC output

OPEC has left its output ceiling unchanged for more than a year since announcing a record supply curb of 4.2 million barrels per day (bpd) agreed to in December 2008.

However, several members of OPEC have relaxed their compliance with production curbs as global oil benchmarks have been at high levels.

A Reuters survey last month showed that OPEC crude supply rose in February to its highest in 14 months, with members of the group making 53 percent of promised supply cutbacks versus 56 percent in January.

OPEC's top producer Saudi Arabia nudged supply up to 8.22 million bpd, an average of figures from survey participants showed. Estimates of output ranged from an increase of 100,000 bpd to no change.

OPEC is expected to keep oil production targets steady when it meets in Vienna on 17 March. But it could raise output later this year as the world recovers from recession, pushing up demand for fuel, a Reuters poll showed.

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