Saudi Arabia fails to find buyers for additional oil

US, WASHINGTON (ORDO NEWS) — Saudi Arabia is trying to find customers for the purchase of its additional oil as part of the price war in the oil market, as demand has risen sharply amid an outbreak of coronavirus and freight rates, reports Reuters.

It is noted that the combination of these factors undermined the desire of the kingdom, which is considered the leader of OPEC, to seize market share by expanding oil production.

Sources said Royal Dutch Shell and US refineries reduced their consumption of Saudi oil, Finnish Neste did not buy kingdom oil in April, and Indian refineries tried to delay supplies. Polish refiners are also cutting purchases, they added.

Unipec, a trading group in Sinopec, Asia’s largest oil refinery in China, also decided not to buy more Saudi oil in April after raising freight rates, sources said.

The world’s largest oil exporter plans to dramatically increase exports after the collapse of this month’s three-year supply cut agreement between the Organization of Petroleum Exporting Countries (OPEC) and other producers, including Russia (OPEC +).

But given the fact that demand is also falling due to global measures to curb the outbreak of coronavirus, oil companies are slowing down the pace of refining at refineries and are in no hurry to buy additional volumes from Saudi Arabia, sources said.

World oil demand is expected to fall by 20% in the coming months, Fatih Birol, head of the International Energy Agency (IEA), said earlier.

Along with the consequences of coronavirus, sources said the increase in transportation costs also affects the market situation.

Saudi Arabia stated that it could not provide freight discounts on goods in accordance with the terms of the contract due to a jump in rates for the use of tankers.

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