Saudi Arabia will import near record high diesel volumes this summer, as it gears up to beat the sweltering heat and meet rising travel needs during, trade sources said.
State oil giant Saudi Aramco will import up to 8.9 million barrels of diesel in June, up from an estimated 6.7 to 7.5m barrels in May, according to the sources, who expect at least the same volume or higher to be booked for July.
Top oil exporter Saudi Arabia shipped in record diesel volumes of 8.99m barrels in July, 2011, up from 8.13m in June that year, government data published from 2002 through the Joint Organisations Data Initiative showed.
"I think this year, the July, 2011 number might be surpassed as Saudi's diesel demand is growing every year and their new refinery is not expected at least until later this year," a Gulf-based trader said.
Higher overseas purchases by Saudi Arabia should help boost spot premiums and support weak Asian gasoil margins as Aramco imports from countries such as India and Singapore.
Aramco relies heavily on imported diesel in summer when demand for electricity peaks with rising use of air conditioning as temperatures soar to a grilling 50 degrees Celsius.
To cut its imports, Aramco has planned three new refineries. But the first of these which will produce 176,000 barrels per day of diesel comes online in the second half of 2013, instead of the second quarter as previously expected, traders said.
Until the refinery – a joint venture with France's Total and Saudi Aramco Total Refining and Petrochemicals Co's (SATORP) Jubail refinery – is at full capacity, Aramco will buy heavily to ensure it is covered for Ramadan, when travel within the region significantly picks up.
This year, Ramadan is due to start in early July.
"Aramco's expecting very high demand this summer and they are stocking up before Ramadan. The demand growth is higher compared to previous summers as there are several infrastructure expansion projects ongoing," one middle distillates trader said.
Refinery glitches also led to higher imports, traders said.
"The Sasref unit was down and the Jeddah refinery maintenance has been extended. These all add to why they're buying higher than usual. The summer demand is already here and they need to stock up for more."
* Reuters
