By: OrePulse

Saudi Arabia and refiners across Asia are at odds over the terms of crude oil contracts for 2027, with negotiations needing to wrap up within days, according to people familiar with the discussions.

Gulf producers and Asian buyers negotiate term supply agreements each year, but the 2027 round has been complicated by the war in Iran, which has disrupted fixed-volume deliveries through 2026 and pushed several Middle Eastern exporters toward higher spot sales to Asia, their biggest export market, the people said.

The central disagreement is whether the additional spot-market barrels that Asian refiners bought this year should be credited against their 2026 term contract volumes. Refiners contend they should, arguing that sellers were unable to deliver the cargoes originally promised under those contracts because of the conflict. Saudi Arabia, for its part, is said to be pushing buyers to agree to larger term volumes for 2027, on the basis that the refiners did not fulfill their 2026 purchase commitments, according to the people familiar with the talks.

Refiners dispute that reading of the contracts, and the impasse has begun spilling into the spot market. Purchases of November-loading crude by Asian refiners from Saudi Arabia and other Gulf exporters have slowed amid the standoff, the sources said. Buyers across the region are hesitant to lock in bigger term commitments for next year while the conflict continues and the situation around the Strait of Hormuz remains unresolved.

The timing adds pressure on both sides. Buyers in Asia generally finalize spot purchases about a month ahead of loading, meaning cargoes due in January 2027 would normally be ordered in November, leaving little room for the talks to drag on. Without clarity on their term volumes for the new year, refiners say planning those spot purchases becomes harder, a gap that could leave the Gulf's spot crude market harder to read in the months ahead, according to the people familiar with the negotiations.

Not all Gulf suppliers are taking the same line. The United Arab Emirates' ADNOC has permitted some Asian customers to apply spot purchases toward their contractual term volumes this year, the sources said, though whether that arrangement will extend into 2027 has not been settled.

Neither Saudi Arabia nor the refiners involved have made public statements detailing their positions, and the account of the negotiations rests on people described as familiar with the discussions rather than on-the-record comment from either side. The lack of an on-record account from either side leaves the scale of the disagreement, and how close the two sides are to resolving it, difficult to verify independently.

Term contracts have traditionally given Asian refiners predictable access to Gulf crude across the year, with spot cargoes used to supplement those volumes when needed. This year's disruption to that pattern, driven by the conflict in Iran, has left both producers and buyers negotiating 2027 terms from a less settled starting point than usual.

How the dispute is resolved will shape the volume and pricing of Gulf crude bound for Asia's largest refining markets next year, at a moment when the region's oil trade is already being reshaped by wartime disruptions to supply this year. A prolonged standoff could further slow spot activity in the Gulf in the near term, even as both sides work toward settling the longer-term contract terms before the current window for 2027 negotiations closes.