South Korea and India purchased 16 million barrels of US crude so far this month.
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The US is luring Asian buyers with cheap crude as competition with the Middle East heats up.
Refiners in South Korea and India scooped up about 16 million barrels of US crude this month, according to Bloomberg.
US crude oil exports hit record highs in July as other countries scramble to replace Russian supply.
Asian buyers are pivoting towards cheap US crude in a sign that demand for Middle Eastern oil is waning, Bloomberg reported.
South Korean and Indian oil refiners have so far snapped up around 16 million barrels of US crude on the physical spot market this month, which will largely be delivered in November, sources with knowledge of the matter told the outlet. This is double of the amount of oil purchased over the same period in July.
West Texas Intermediate oil, the main US export grade, are trading at a premium of less than $8 a barrel over the Dubai benchmark for crude due to arrive in November, including shipping and other costs, according to Bloomberg. The smaller the premium, the more attractive US crude will be to Asian buyers over Middle Eastern crude.
On the futures market, November WTI futures are trading at a premium of just $4 a barrel to Dubai futures and at a discount of nearly $4.50 a barrel to Murban futures – those backed by the UAE’s flagship blend.
The shift in demand away from Middle Eastern to US crude suggests competition between producers in the two regions is heating up as the US, now the world’s largest producer, undercuts the world’s top oil exporting region.
The US has been pumping out more crude as the West scrambles to replace Russian supply after the invasion of Ukraine. In late July, US crude-oil exports hit a record high of 4.55 million barrels a day, according to data from the Energy Information Administration.
At the same time, Saudi Arabia raised its oil prices for Asian buyers for the month of August as a result of high demand and a tighter oil market in the face of economic sanctions.
But that demand appears to be cooling. Saudi Aramco has allocated full contract volumes of crude to at least 4 North Asian buyers for the last two months, suggesting that any squeeze on supply in the market could be easing as demand for its crude has not accelerated beyond what its buyers originally purchased, Reuters reported.