The Saudi purchase comes less than a week after its trading arm, Geneva-based Litasco, won another tender to supply 65,000 tons of utility grade 180-centistoke (cst) to Pakistan State Oil (PSO), which is largely supplied from the Middle East.

The Russian major bought up to 90,000 tons of 380-cst, for May 29-31 lifting from the joint-venture Sasref refinery in Jubail, at a discount of $13.00-$14.00 a ton to Singapore spot quotes on a free-on-board (FOB) basis, down from minus $8.00-$10.00 previously.

“It’s not clear where they are going to bring the Saudi cargo to. For now, LUKOIL does not have any storage facilities in the Middle East so they would either have to bring the cargo to Singapore or sell it to another player in the Fujairah,” a Singapore-based Western trader said.

“But it will not be sold into Pakistan as the specs are different. They will have to source the Pakistan parcel from somewhere else or buy a similar cargo from someone else in the Middle East.”

Traders said Litasco is looking to add fuel oil to the range of products that is presently covered by its trading office in

Dubai, mainly crude, gasoline and distillates.

The Russian firm is looking to take storage for fuel oil, of 80,000-100,000 cubic meters (cu m), in the UAE port of Fujairah, the world’s third largest bunker port by volume with about 800,000-1 million tons a month.

Currently, it has storage capacity of 250,000-300,000 cu m in the East Asian fuel oil market, in the Singapore trading hub, but is behind major players like Shell, BP, Vitol and PetroChina.

It is also a major supplier of Russian fuel oil into Western Europe, mainly to the Amsterdam-Rotterdam-Antwerp (ARA) region,

and a major player in the European market, as well as a regular arbitrage player, moving VLCC-loads of fuel oil from West to East regularly almost every month.

Litasco’s entry into the Middle East follows recent moves by international trading houses, such Shell, Vitol, Trafigura and Chemoil, into a market that has once been dominated by local players such as FAL Oil and Bakri.

The biggest outlets for Middle East fuel oil are the Fujairah bunkers market and the Pakistan utility market, which averages 550,000-600,000 tons of mostly 180-cst per month.