Saudi Arabia is struggling to find buyers for its oil as demand falls sharply due to the coronavirus pandemic and freight rates, undermining the kingdom’s desire to take market share from competitors by expanding production, Reuters reports.
According to Reuters, citing sources that the refineries of Royal Dutch Shell and the U.S. began to consume less Saudi oil, the Finnish Neste refused to buy in April, and Indian refineries have tried to delay deliveries. Polish refiners have also reduced their purchases.
Unipec, a trading group of Asia’s largest refinery Sinopec, also decided not to buy more Saudi oil in April after raising freight rates, sources said.
The world’s largest oil exporter planned to sharply increase exports after the failure of a deal to cut supplies between the Organization of Oil Exporting Countries and other producers, including Russia.
But with demand falling as a result of global measures to contain the coronavirus outbreak, oil companies are reducing processing rates and are not rushing to buy additional Saudi barrels, sources said.
Global demand for oil is expected to fall by 20% in the coming months, International Energy Agency President Fatih Birol said.
One source said that oil companies are seeking to reduce Saudi oil reserves by as much as 25% in April.