Oil benchmarks were weaker on Monday, continuing the lower close last week with the markets weighing strong supply from Russia on one side and the stronger anticipated demand from China on the other.

Profit taking and cooling off were attributed to factors such as the upcoming US Fed meeting starting on Tuesday and the likelihood of OPEC+ keeping its output policy unchanged. Members of the OPEC and others including Russia will hold a virtual meeting at 1100 GMT on February 1.

Dubai swaps timespreads fell last week, reflecting the weakness seen in other benchmarks. With stronger demand for Brent linked crudes, the EFS was seen widening as compared to last week. The EFS is an important metric in comparing Dubai-related crude oil versus grades pricing against the North Sea Brent benchmark.

Saudi Arabia is likely to lower the official selling prices (OSPs) for crude oil grades sold to Asia for a 4th month in succession with weaker spot market differentials, stronger demand for arbitrage crudes and the sustained inroads made by Russia in capturing market share in the top 2 Asian consumers (China and India). A Reuters survey of consumers pegged the decrease in Arab Light differentials for March loading cargoes at about 30 cents a barrel. Differentials for the heavier grades could fall more.

The upcoming February 05 deadline for EU embargo on Russian refined products and the discussions underway for setting a price cap of Russian refined products similar to that for crude oil could redistribute trade flow patterns with new buyers and transshipment destinations likely to emerge for Russian products.

Crude oil exports have been largely stable and Reuters expected a 50% increase in exports from Baltic ports in Feb based on calculations and traders’ information.

India refining sector highlights

Indian refining throughput increased in December to touch 22.27 million MT, rising from the 19.58 million MT processed in November. Strong demand in the key Asian demand center continues and was a key factor in the elevated throughputs. Reuters reported the tentative shutdown schedules for Indian refiner BPCL’s different plants. The Bina refinery (central India)

with a capacity of 156 kbpd is set to be taken down for maintenance from June for about a month while the half of the 240kbpd Mumbai refinery would be shut in September/October.

MENA crude oil exports

Weekly crude oil exports from the Middle East were marginally higher at 113.8 million bbl while North African exports were seen flat at 16.1 million bbl.

With the OPEC+ members likely to maintain production policy, exports from the Middle Eastern countries are expected to remain steady with no major increase expected.

(Reporting by Sudharsan Sarathy; editing by Seban Scaria)