(Bloomberg) -- The trading unit of one of the world’s biggest refiners is displeased with Saudi Arabia’s oil pricing for a second straight month, which may benefit crude sales from the U.S. and Russia.
Unipec, which buys crude for giant Chinese processor Sinopec, is seeking a 40 percent cut to Saudi oil volumes versus supplies available under long-term contracts for June loading, according to a senior official at the trading company. That’s because the world’s biggest crude exporter has set prices too high for grades such as Arab Light and Arab Medium, he said, asking not to be identified because of internal policy.
The latest comments from Unipec, or China International United Petroleum & Chemicals Co., follow its move to buy fewer barrels from the kingdom in May as well after state-run producer Saudi Aramco unexpectedly increased prices for that month. For June, the Middle East nation set the cost of its benchmark crude for sales to Asia at the highest level since August 2014.
With Saudi prices so high, it may prove more viable to ship alternative grades such as Russia’s Urals, WTI Midland from the U.S. and Kazakhstan’s CPC Blend to Asia, the world’s biggest oil buying region, the Unipec official said. Nobody immediately responded to an email seeking comment sent to Aramco’s press office outside regular business hours.
China, the world’s biggest oil importer and an important market for the globe’s producers, has so far been alone among Asia nations in publicly shying away from Saudi supply due to the pricing. The Middle East producer was said to have supplied full contractual crude volumes for May to at least two other companies in North Asia. In Japan, Cosmo Oil Co. said the nation’s refiners are highly unlikely to follow Unipec in cutting purchases.
Still, lower sales to China would mean Saudi Arabia will continue losing market share in the nation, where it’s already been dislodged as the top supplier by Russia and has seen competition from supplies flowing from Africa to the U.S. With Saudi prices used as a yardstick for other Middle East producers, the effect of what Unipec says is costly crude could reverberate to shipments from other sellers.
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