The UAE’s Abu Dhabi National Oil Co (ADNOC) has told its customers in Asia that it has sufficient supplies of crude oil as demand begins to return, according to S&P Global Platts on Monday.
The announcement came late last week, Platts reported citing market sources. Asian market participants said that ADNOC’s statement gave the Gulf exporter a competitive edge, as refineries that had shuttered in the face of dwindling demand due to the coronavirus pandemic begin to ramp up production.
Major Asian oil importers such as China, the world’s biggest importer, Japan and Korea are beginning to show signs of demand recovery for crude, Platts said.
A historic oil output cut deal was signed between most of the world’s major oil exporters in April, with the Organization of Petroleum Exporting Countries (OPEC) and its allies, including Russia, removing 9.7 million barrels per day (bpd) of oil output from global markets.
ADNOC announced significant cuts to its oil output in May in line with the OPEC agreement.
The agreement was set to shrink to a 7.7 million bpd cut in July, but sources have suggested that leading members of the alliance are discussing extending the cuts by another one to two months.
A meeting between OPEC and its allies, known as OPEC+, may also be brought forward to Thursday, with members likely discussing the oil output cut and demand projections given the impact of the coronavirus pandemic.
The virus has caused a “historic shock” to global oil markets, with some analysts and industry officials believing it could take over a year for a full recovery to pre-coronavirus levels.