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Middle East Crude-Basra demand to rise on India’s strategic storage

Middle East Crude-Basra demand to rise on India's strategic storageSINGAPORE: Iraqi Basra Light received a boost in the Middle East crude market on Thursday as India geared up to buy 8 million barrels of the medium sour grade to fill its first strategic petroleum reserves (SPR).

India’s oil ministry on Tuesday instructed state refiners Indian Oil Corp and Hindustan Petroleum Corp Ltd to each seek two very large crude carriers (VLCC) of Basra oil for arrival in May-June, two sources familiar with the matter said.

The prompt demand from India came on the back of tighter supply in April as Iraq cut exports for a second month.

The drop in supply drove premiums as high as more than 60 cents a barrel for April-loading cargoes, traders said.

Separately, Iraq has notified its exploration partners that it plans to start offering Basra Heavy from May onwards, sources with knowledge of the matter said.

But details remained sketchy and the companies were seeking clarification from SOMO especially on how the crude will be priced, they said.

TENDERS

Rosneft issued its monthly tender to sell three Sokol cargoes for loading on May 7-12, 17-22 and 20-25. The tender will close on March 20 with bids valid until March 26.

DME OMAN

DME Oman for May settled at $ 52.90 a barrel, up $ 1.53, at 0830 GMT. This puts DME Oman at 66 cents a barrel below Dubai swaps, against a discount of 74 cents in the previous session.

On the window, Unipec and Trafigura will each deliver an Upper Zakum and a Dubai cargo to Shell respectively after completing sales of 20 partials. In addition, Unipec also sold a Dubai cargo to Shell at 80 cents a barrel below Dubai quotes.

MARKET NEWS

OPEC efforts to bring non-member countries such as Russia on aboard in cutting output have made little progress, officials say, and even the chance of more Iranian exports hitting prices if sanctions end is unlikely to boost cooperation.

South Korea’s state-run oil inventories are rising from the lowest levels in five years as refiners restock with cheaper crude and as traders store oil to sell later at higher prices.

Copyright Reuters, 2015

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