Russian Ally Buys First Saudi Crude Amid Tensions With Kremlin

(Bloomberg) -- Belarus bought its first-ever crude from Saudi Arabia as tensions with Russia over energy supplies pushed Minsk to reach a deal with the OPEC leader.

“There are ample amounts of Saudi oil on the market, so it makes sense for us to work with this direction,” Belneftekhim spokesman Alexander Tishchenko said by phone from Minsk Wednesday. A 80,000-ton (586,000-barrel) shipment of Saudi crude will arrive at the Baltic port of Klaipeda on May 11, he said, without disclosing the terms.

Saudi Arabia’s symbolic shipment to the landlocked country on Russia’s western border illustrates the through-the-looking-glass nature of the oil market since global demand collapsed due to the spread of the coronavirus. Belarus has traditionally bought all its crude from Russia, through the Soviet-era pipeline network.

Moscow and Minsk have clashed in past months on issues such as energy prices and integration, forcing Belarus to look for alternative supplies or pay what it says are unfair prices.

Nearly a quarter of the 2 million tons of oil it bought in April came from other sources, including Norway and Azerbaijan. Belarus has been in talks with Saudi Arabia over supplies since January.

The Organization of Petroleum Exporting Countries and its allies agreed to reduce supply by nearly 10 million barrels a day this month after a short but damaging price war between Saudi Arabia and Russia. Before the deal, Riyadh ramped up output and offered discounts for Europe, sending prices spiraling.

Oil traders estimate that demand will drop by as much as 35 million barrels a day this year, dwarfing the agreed-upon cuts and opening room for competition.

©2020 Bloomberg L.P.

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