The United Arab Emirates’ state-run Abu Dhabi National Oil Company will reduce its flagship Murban crude volumes to Asia by up to 5 percent from contracted levels for a third month in May as it diverts more oil for use at a new refinery.
The OPEC member has been exporting Murban to Asia at the low-end of its contracted tolerance levels since March as it ramps up refinery operations at Ruwais.
The lower volumes of shipments have tightened light sour crude supply in Asia, prompting refiners to buy more spot cargoes and supporting spot premiums for Murban and similar grades such as Das and Qatar Land.
Buyers of the grade are concerned ADNOC may reduce Murban exports further as it increases run rates at Ruwais. ADNOC could not be immediately reached for comment.
ADNOC told buyers that a minus 5 percent operational tolerance against contracted supply would be applied for cargoes loading in May, three Asian refining sources who received the notice said on Thursday.
This means ADNOC’s term crude buyers will not have the usual option to load up to 5 percent more oil, one of the sources said.
Operational tolerance, typically ranging from plus to minus 5 percent of contracted supply, is used to adjust loading volumes depending on demand and shipping logistics.
A 5 percent cut in Murban shipments removes about 12 million barrels of the crude from the market per month as current production is around 1.6 million barrels per day (bpd).
Abu Dhabi Company for Onshore Petroleum Operations Limited (ADCO), operator of the onshore oilfields which produce Murban, plans to increase output of Murban to 1.8 million bpd in 2017, it says on its website.