RIYADH: Saudi Arabia will increase their push towards locking in long-term crude and oil product contracts in Asia as they compete with higher US exports to the region.
“Long-term contracts give assurance to the producer/refiner, they know that the product is sold, they know the price, their income is locked in and so it is easier to plan, easier to make investment decisions,” said Spencer Welch, director for oil markets and downstream at London-based IHS Markit.
Saudi Arabia and the UAE are producing more refined products after cutting back on crude supply to comply with the ongoing global oil output cuts.
Saudi Arabia, the world’s biggest oil exporter, and the UAE, the second-largest Arabian Gulf producer, are earmarking more crude for Asia and boosting exports of refined products, as they seek to extract more value from each barrel of oil pumped.
As the US increases exports for crude, condensate and products, Gulf producers would likely want to lock-in Asian buyers.
