Saudi Aramco announces more vacuum gasoil supplies for May

Saudi Aramco is set to export more vacuum gasoil (VGO) supplies from its Jizan refinery in May, according to traders and shipping data. This move indicates that the refinery is yet to reach its full output capacity, contrary to initial expectations.

The Jizan refinery, Aramco’s newest facility, was anticipated to increase its output for 10-ppm gasoil and reduce VGO exports this quarter upon achieving full capacity. However, recent shipping records reveal that Aramco has offered three 525,000-barrel VGO cargoes for loading in May, an increase from the two cargoes exported in April. Saudi Aramco was not immediately available for comment.

Scheduled for loading between May 1-3, May 11-13, and May 21-23, the cargoes exceed Aramco’s usual offering of up to two VGO cargoes per month, as per trade sources and past tender records. VGO, a residual oil produced during petroleum distillation, is commonly used as a refinery feedstock to manufacture diesel.

The rise in Aramco’s VGO exports coincides with the weakening of diesel refining margins globally. Refinitiv data indicates a collapse of over 50% in Asian refiners’ diesel margins to $14.46 a barrel on Tuesday, compared to the beginning of the year. Additionally, benchmark Northwest European diesel refining margins dropped below $16 a barrel this week, marking their lowest since February 25, 2022, due to high import levels into the region.

Image Credit: AP Photo/Amr Nabil

Tags : Saudi