Trade sources said that this summer, Saudi Arabia will import near record high diesel volumes as it gears up to meet rising travel needs during the Islamic month of Ramadhan.
The Kingdom’s largest oil company Saudi Aramco will import up to 8.9 million barrels of diesel in June and the same or higher volume is expected for July. This is up from an estimated 6.7 to 7.5 million barrels in May, according to the sources.
The Kingdom shipped in record diesel volumes of 8.99 million barrels in July, 2011, up from 8.13 million in June that year, government data published from 2002 through the Joint Organisations Data Initiative showed.
Saudi’s diesel demand is reportedly growing every year and their new refinery is not expected at least until later this year. This is expected to help boost spot premiums and support weak Asian gasoil margins like India and Singapore.
Saudi Aramco heavily relies on imported diesel in summer when demand for electricity peaks with rising use of air conditioning as temperatures soar to a grilling 50 degrees Celsius.
To cut its imports, Saudi Aramco has planned 3 new refineries. The first of these which will produce 176,000 barrels per day of diesel comes online only in the second half of 2013, instead of the second quarter as previously expected, traders said.
“Aramco is expecting very high demand this summer and they are stocking up before Ramadhan which is due to start early July. The demand growth is higher compared to previous summers as there are several infrastructure expansion projects ongoing,” one trader said.