TOKYO: Saudi Arabia told major Asian refiners yesterday it will raise their crude sales by a tenth in November, more than expected as it meets the lion's share of Opec's pledge to boost output, industry sources said.
The recovery in shipments to 100 per cent of contractual volumes was a surprise to many customers, and would equate to as much as a 350,000 barrels per day (bpd) increase in exports.
That is more than half of Opec's promised 500,000-bpd rise agreed one month ago after the kingdom convinced other members to raise output in a gesture to consumer nations, a move that has failed to tame oil prices still near record highs above $80.
The first confirmation of extra Opec oil is still unable to help ease prices, although Asian traders said higher supplies would likely depress differentials for spot crude in December.
Sources at two Japanese refiners and one in South Korea said state-run Saudi Aramco had notified them that it would supply the entire volume agreed under the refiners' annual contract, the first time since Opec began cutting output in November last year.
Traders with refiners in Taiwan and China said they expected the same, but had yet to receive formal notices.
Meanwhile, world oil demand will grow more slowly than expected in the fourth quarter as record-high oil prices prompt some consumers to seek alternatives, the International Energy Agency said yesterday.
The IEA, adviser to industrialised countries, said in its monthly Oil Market Report demand will rise by 2.03 million bpd in the fourth quarter from a year ago, 320,000 bpd less than previously expected.
"There has been a bit of substitution going on, natural gas for oil, which is essentially a price effect," Lawrence Eagles, head of the IEA's Oil Industry and Markets Division, said.
"There have also been some small downward adjustments to economic growth, which have also played a role."
The cut in fourth-quarter demand follows a similar move by the IEA last month and points to a slightly lower need for oil from Opec in the final months of this year.
Opec is set to raise output in November, a move that followed months of pressure from the Paris-based IEA which has been worried about the impact of record oil prices above $80 a barrel on consumers.
