Saudi Arabia will import higher than usual volumes of diesel for August as soaring temperatures stoke demand for the power generation fuel, though the quantum may be as much as a quarter lower than July shipments, industry sources said on Monday.
Saudi Aramco’s sustained high diesel imports could mop up excess supply from India and help keep Asian gasoil margins steady, traders said. Exports from India have been increasing due to the monsoon season in the country.
State oil giant Saudi Aramco will likely import about 6 to 7 million barrels of diesel in August, down from an estimated 7 to 8 million barrels in July, according to one of the sources familiar with the matter.
Top oil exporter Saudi Arabia shipped in near record diesel volumes of up to 8.9 million barrels of diesel in June, trade sources have estimated earlier.
It last imported a record high diesel volume of 8.99 million barrels in July, 2011, government data published from 2002 through the Joint Organisations Data Initiative showed.
Aramco relies heavily on imported diesel in summer when demand for electricity peaks with rising use of air-conditioning as temperatures can soar to a grilling 50 degrees Celsius.
In July, high temperatures also coincide with the fasting month of Ramadan, when travel within the region significantly picks up, boosting diesel usage.
“People expected volumes to go down a lot in August after Ramadan but temperatures are still very high, so high diesel imports are likely to be sustained,” a Gulf-based source said.
There have been no diesel cargoes matching Saudi specifications offered for export by Gulf refiners since late June when Bahrain Petroleum offered a July-loading cargo, suggesting that supply is tight in the region, traders added.
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 fourth quarter of 2013 at the earliest, instead of the second quarter as previously expected, traders said.
Until the Saudi Aramco Total Refining and Petrochemicals Co.’s (SATORP) Jubail refinery — a joint venture with France’s Total — is at full capacity, Aramco will buy heavily to ensure it is covered for Ramadan and summer.