Asian oil refiners said on Monday they had yet to receive notice of curbs on their Gulf crude shipments after Opec agreed to cut output last week, but most were bracing for a likely 5 percent reduction in supplies. The Organisation of the Petroleum Exporting Countries decided on Friday to chop production by 1.5 million barrels per day or about 5 percent from November 1 to halt a more than 50 percent slide in prices.
Traders are now looking for evidence that they are making good on that promise. There was no sign of that in Asia on Monday, where five oil refiners and one trader in Japan, Taiwan and South Korea told Reuters that they had not received any notice over the weekend from any of their biggest Middle East Opec suppliers about a reduction in shipments loading from December.
Most Asian refiners said they expected to hear from their key suppliers soon, with Saudi Arabia potentially able to reduce the volume of crude loaded onto previously booked November cargoes while the main exporter from the United Arab Emirates may inform customers of new limits on December shipments.
"We assume the cut will be around a 5 percent range," said one source at a refiner in South Korea. The source declined to be named because he wasn't authorised to speak to the media. With oil demand starting to decline as the world economy tumbles toward recession, many refiners were at ease with the anticipated supply cuts, especially as the credit crisis has elevated the cost of financing inventories.
"There could be a 5 percent cut, but it won't have a very big impact," a North Asian refiner said. "Our stocks are high. Five percent is still acceptable for us. I think first they will have a small cut and then see." Oil refiners in Europe also said they had yet to receive notice from Saudi Arabia and other Opec members of lower supplies.
A second refiner in the region said his company had yet to be informed of supply curbs. Saudi Arabia, the world's biggest exporter, normally informs its customers how much crude it will sell them by the middle of the preceding month. The kingdom has been supplying Asian refiners with their full contracted volume since late last year.
The Abu Dhabi National Oil Co, the main oil producer for the United Arab Emirates, usually notifies its Asian lifters about their supplies by the end of the month. Saudi Arabia, which sells just over half of its estimated 7 million bpd of crude exports to Asia, is expected to cut production by 466,000 bpd under last week's Opec agreement.
The UAE, which sells nearly all its crude to Asia, should cut 134,000 bpd. Some Asian refiners said it may be difficult to impose curbs before December, with November vessels already booked. That would mean the reduction would not be felt in north Asia until January due to the one-month voyage time.