Due to higher Saudi crude prices in January, lower overall demand for crude amid the Omicron uncertainty, the Chinese crackdown on illicit practices at its independent refiners, and the start of the refinery maintenance season in late Q1 2022, Asian refiners have decided to forego extra Saudi crude supply for loading in January.

According to Bloomberg, refiners in the world’s largest oil-importing region have not requested more supplies from Saudi Arabia, the world’s top oil exporter, beyond the term deliveries under long-term contracts.

Saudi Arabia, on the other hand, increased the official selling price for its flagship Arab Light crude to a nearly two-year high premium over the Oman/Dubai benchmark earlier this month, showing confidence in Asian demand despite the ongoing uncertainty surrounding the Omicron variation of COVID.

For Asian consumers, Arab Light will cost $0.60 more per barrel next month than it does this month. That’s $3.30 a barrel more than the Oman/Dubai benchmark, which is used to price Middle Eastern petroleum bound for Asia. The premium for Arab Light over Oman/Dubai is at an all-time high, dating back to early 2020, months before the outbreak.

Apart from the higher Saudi prices, Asian refiners are not rushing to buy crude above the amounts under their term supply agreements, owing to low refining margins for fuels after the peak winter demand in March, when cargoes loaded in January is expected to arrive in Asia.

Furthermore, traders told Bloomberg that China’s independent refiners, often known as teapots, will likely see decreased purchases in the coming weeks as the local government investigates refinery activities in Shandong province.