Updated January 10th, 2024 at 20:09 IST

Refiners eye additional Saudi oil amid price cuts

Experts acknowledge the potential benefits of the new legal framework for attracting investments.

Reported by: Business Desk
Representative Image | Image:Pexels
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Oil export price cuts: State refiners are poised to ramp up imports of Saudi crude oil following a reduction in the official selling price of its primary export grade, marking its lowest level in 27 months, according to sources within the companies.

The country's leading refiners, Indian Oil Corp alongside Bharat Petroleum are contemplating securing an extra 1 million barrels of oil each from Saudi Aramco for February, sources told Reuters.

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Global oil dynamics

While Saudi Aramco typically notifies its Asian buyers about monthly crude allocations by the 10th of each month, both Indian oil companies and Saudi Aramco remained tight-lipped, declining to provide further comments to the media.

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One of the sources highlighted that IOC is considering augmenting its oil intake from Saudi Arabia and West Africa, partly due to challenges faced in procuring Russian light sweet crude Sokol, primarily concerning payment issues.

The move by refiners align with shifts in global oil dynamics, particularly with Russia emerging as the country's top oil supplier, consequently displacing Iraq and Saudi Arabia to second and third positions, based on trade sources' data.

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Clarity in commercial disputes

This strategic decision comes in the wake of Washington's recent sanctions on ships and vessel operators involved in selling Russian oil above the capped price of $60 per barrel set by the Group of Seven (G7) nations. Heightened scrutiny by financial institutions and service providers has further tightened the rules governing oil trade transactions.

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The Saudi Arabian government's implementation of a new written civil code on December 16 aims to bring more certainty and legal clarity to commercial disputes. This works with Saudi Arabia's Vision 2030 reform plan, which seeks to diversify the economy away from fossil fuels.

However, while experts acknowledge the potential benefits of the new legal framework in attracting investments and offering clarity to investors, doubts persist about its practical application and how the new laws will be interpreted in business disputes, potentially affecting the speed of direct investment inflows.

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Despite these lingering doubts, the new civil transactions law signifies a step towards legal transparency, introducing provisions that could strengthen investor rights, limit damages, and clarify contractual obligations. Yet, uncertainties surrounding the treatment of foreign and local parties in business disputes remain a focal point for investors seeking clarity and assurance in the evolving legal landscape of Saudi Arabia.

(with Reuters inputs)

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Published January 10th, 2024 at 20:09 IST