The disputes between Saudi Arabia and Asian refiners over crude oil supply for 2027 are intensifying. These negotiations are taking place as the Iran war has had significant impacts on fixed supplies this year, and Middle Eastern exporters have turned to spot sales to deliver crude oil to their export destinations.
Details of Negotiations and Disputes
Asian refiners and Saudi Arabia are discussing whether the volume of spot sales this year should be counted as fixed supplies for 2026. Refiners believe this volume should be considered as fixed supplies, as sellers have failed to deliver contractual shipments. In contrast, Saudi Arabia emphasizes that refiners must commit to purchasing higher volumes of Saudi crude oil in 2027, as buyers have not fulfilled their contractual obligations for fixed supply this year.
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Implications of Disputes on the Oil Market
These disputes have also spilled over into the spot market, slowing Asian purchases from Saudi Arabia and other Middle Eastern producers. Asian refiners generally are reluctant to increase commitments for fixed supplies next year, given the ongoing tensions and uncertainty regarding the end of the crisis in the Strait of Hormuz. Contract negotiations need to conclude soon, as refiners typically order spot shipments for loading in January 2027 in November 2026. The lack of sufficient information regarding fixed supplies until January will reduce transparency in spot purchases and complicate the assessment and forecasting of the Middle Eastern spot market.
ADNOC of Abu Dhabi has allowed some Asian refiners to count their spot supplies as contractual supplies; however, no decision has yet been made regarding the continuation of this arrangement next year.
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