Energy security

Saudi oil industry face huge risks as American, European refiners refusing Riyadh's crude

Oil prices collapsed to their lowest levels in decades in March amid coronavirus concerns and OPEC+’s failure to reach a deal on production cuts, which prompted Riyadh and its allies to open the taps.

Refineries in the United States and Europe are rejecting to accept any more Saudi oil, even at discounted prices, owing to a crude glut and lack of storage space, the Wall Street journal has reported, citing Saudi officials and oil traders.

Gulf Agency Company Ltd, a Dubai-based maritime logistics company, says buyers in India have also cut back on Saudi crude as that country has gone into lockdown to try to slow the spread of COVID-19. According to the company’s sources, at least 52 Indian ports have invoked a force majeure amid the outbreak, allowing them to cancel orders without incurring penalties.

Traders also told the WSJ that Russia – the oil exporter whose market share Saudi Arabia has been most keen to capture, has been able to compensate some of the decline in exports to Europe by redirecting them to China, a country where demand has been enjoying a slow recovery amid that country’s efforts to fight the pandemic.