September 21, 2023 [Oil Price]- Russian oil major Lukoil and independent producer CenGeo have sent CPC blend to United Arab Emirates’ national oil company ADNOC, marking the first time ever the UAE has purchased the crude blend from Russia, Reuters said in an exclusive report.
In early August, Lukoil supplied 123,000 tonnes of CPC Blend oil on Delta Hellas tanker also to Ruwais terminal, although ADNOC has declined to comment on the purchase. CPC Blend is crude oil transported in the common stream via the Caspian Pipeline Consortium pipeline system. The UAE sometimes imports different grades for its refineries to optimize price differences.
Unlike Western countries, the UAE has not imposed sanctions against Russia. And beyond this, the U.S. Office of Foreign Assets Control (OFAC) has announced that CPC Blend oil was not subject to sanction limitations if it was of Kazakh origin though it did suggest that buyers of the blend seek certificates of origin. Moreover, the U.S. warning only applies to buyers which are observing sanctions.
Heavy trading in Dubai oil has lifted its premium to WTI crude to record levels, a development that experts say could make U.S. crude even more competitive in Asia. More traders have turned to Dubai after Persian Gulf producers such as Saudi Arabia hiked prices and shipping rates also climbed. Bloomberg has reported that Dubai swaps were trading at a big premium to the U.S. benchmark West Texas Intermediate futures in Singapore. Increased trading of partials–smaller lots that are accumulated and converted into physical cargoes–is also giving a boost to Dubai oil prices.
The UAE has declared it will not join Saudi Arabia in making voluntary oil production cuts, claiming that the cuts by the Saudis are enough to balance the markets. This is hardly surprising considering that the UAE has long argued that it should be allowed to pump more than its current OPEC quota. But OPEC’s third-largest producer was not content to just maintain its current production. The UAE got a huge concession from OPEC in the form of an upward revision of its quota that will take its production up by 200,000 barrels per day (bpd) in 2024 to 3.2 million barrels.
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