Indian refiner seeks to halve Saudi oil imports as tanks fill

Bharat Petroleum Corp. is seeking to cut its crude oil imports from Saudi Arabia by as much as half in May, frustrating the Middle Eastern supplier’s attempts to keep its prized Asian market intact.

Nominations for Saudi Arabia from India’s third-biggest refiner could be 40%-50% lower than normal, in line with reduced processing as the world’s largest lockdown hurts demand, R. Ramachandran, director of refineries at BPCL, said in an interview. BPCL will accept cargoes that were deferred from April and a couple of new ones in May.

“Our tanks are almost full, and we also have some cargo already in transit,” Ramachandran said.

Oil demand in the world’s third-biggest consumer has plunged 70% and may fall further after Prime Minister Narendra Modi extended the lockdown to 40 days from an initial 21 to contain the spread of the coronavirus. The collapse forced most Indian refineries to slash processing rates and pushed some to invoke force majeure on some oil shipments as storage tanks filled up.

As part of long-term supply contracts with the kingdom, Asian buyers had to inform state producer Saudi Aramco this week about how much oil they want next month. In this so-called nomination process, they can typically ask to take up to 10% more or less crude than stipulated by their contracts should market circumstances alter their needs.

Demand is reviving in China and other Asian nations, with processors seeking full contractual crude volumes from Saudi Aramco. At least five Chinese refiners, two Southeast Asian peers and a North Asian rival are seeking normal volumes for May.

Saudi Arabia slashed its official selling prices to Asian customers for May by larger-than-expected margins and seeks to keep flooding the oil market for at least a few more weeks even after signing the historic output cut deal.