Indian Oil Corporation Ltd became India's first refiner to buy light sweet Hibernia crude from Canada's largest oil company, doing the deal after the opening of the arbitrage for Canadian oil to flow to Asia. A decision by the Organization of the Petroleum Exporting Countries (OPEC) to cut output strengthened Middle East benchmark Dubai against other regional markers, allowing oil from the Americas and Europe to be shipped to Asia at competitive prices. Production in North America, led by U.S. shale output, is increasing after supply cuts by OPEC and non-OPEC countries pushed oil prices to above $50 a barrel. This was also the first time that Suncor Energy has sold a cargo of offshore Canadian crude to IOC, a Suncor spokeswoman Sneh Seetal said on Wednesday.
Seetal declined to say how big the cargo was or when it would load, but confirmed Canada's biggest Oil Company had won an Indian Oil Corp tender. "We do market our offshore crude production globally on an opportunistic basis," she said.
Trade sources said Suncor sold the 1 million barrel cargo of Hibernia crude to IOC on a free on board basis. Separately, IOC has also bought its first Russian Urals crude cargo in about a year in another tender. IOC previously bought a cargo of Canadian White Rose oil in November 2013. State-refiners like IOC were last year given the freedom to draw up the crude import strategies that would allow them to make swift gains from changing market dynamics.
News of the Suncor cargo comes after market sources this week said two other vessels carrying Atlantic Canadian crude are on their way to China. The Stena Suede and the Jag Lalit, both Suezmaxes, loaded at Whiffen Head terminal, Newfoundland, according to Reuters ship tracking data. At least one of them was sold by Husky Energy to buyer PetroChina, two sources said.
Husky had said in February it sold its first one-million-barrel cargo of offshore Atlantic Canada crude bound for China from its White Rose field. At the time a Husky spokesman said low shipping rates helped make the transaction worthwhile.