Middle East

Saudi Arabia's state-owned Saudi Aramco was expected to reduce the June loading OSP formulas for Saudi Arabian grades sharply when they unveiled the new OSPs in early May. In the May-loading trade, end-users scrambled to snap up cargoes amid supply fears from Russia. But June trade has calmed somewhat, easing demand/supply fundamentals. As a result, backwardation in Dubai papers narrowed remarkably from the previous month. "In theory, OSP premiums for all grades should narrow by $5.50 to 6.00," said a trader in Singapore. Meanwhile, oil product margins in Asia continued to expand. "We expect a fall for about $4.30 for Arab Light (AL)," said an end-user in Northeast Asia.

Africa/Europe/Russia/America

US Exxon-Mobil declared force majeure for supply from the Sakhalin 1 project, an oil and gas development project. Sokol exports were halted. With western countries imposing sanctions on Russia due to the situation in Ukraine, it was difficult to transport the cargoes. Several sources involved in the project such as equity holders declined to comment on details. Regarding Sokol, exports were delayed as the loading schedule for June was not confirmed even this week. Exxon-Mobil announced on Mar 1 that it would withdraw from Sakhalin 1. Besides Exxon-Mobil which is the operator of the project, India's ONGC and Sakhalin Oil and Gas Development Company (SODECO) which involves Itochu, Marubeni and Japan Petroleum Exploration (JAPEX) Company also have a stake in the project.

Asia Pacific

The market for Cossack from Australia loading June rose to a premium of $1.45-1.55 to Dated Brent quotes. Although naphtha margins in Asia were weak, prices of light grade Ichthys from Australia increased and this lent support to the market. US Chevron sold a spot cargo of Cossack for mid-June loading. While the buyer was unknown, the price was reportedly at a premium in the mid $1's to Dated Brent quotes.