Saudi Arabia is a king of oil, and now they are planning to purchase a huge amount of diesel as a surprise move for the net exporter, adding pressure when diesel markets already are in short supply.
According to traders close to the matter who asked not to be identified, Aramco Trading sought 1.2 million to 4.6 million barrels of low sulphur diesel for delivery to several ports in Saudi Arabia between mid-March and April via a tender.
According to the traders, it’s a rare move from the country, which is usually a net exporter of diesel.
Finding such a large amount of fuel in such a short time will be very difficult, said the traders. It’s coming when diesel markets are sharply backwards, a structure in which cargoes for near-term delivery are more expensive than ones further out.
Buyers are concerned about the loss of Russian diesel, which would have a significant impact on European markets, which account for the majority of the country’s exports. Several European buyers have sought cargo from Asia and the Middle East, and global stockpiles of the fuel are depleting.
Asia’s rapid diesel time spread at noon Singapore time was at a $9.70 per barrel premium, up from less than $2 in early February. Profits from converting crude into diesel in Asia have been volatile as well, falling by as much as $15 a barrel on Thursday compared to the previous day, following in the footsteps of Europe.