* Oman to reduce output by 285,000 bpd in OPEC+ cuts
* Chinese traders snap up MidEast crude for delivery into Shanghai contract
* Price strength boosting Saudi, Kuwait crude import costs in Asia
By Chen Aizhu and Shu Zhang
SINGAPORE, April 30 (Reuters) - Oman crude futures traded on the Dubai Mercantile Exchange (DME) pulled ahead of other Middle Eastern benchmarks this month, pushing up costs for Asian buyers of Saudi Arabian and Kuwaiti oil, industry sources said.
The impact has been particularly felt by term buyers in China, which takes around 2 million barrels a day (bpd) of oil from the two countries, partly priced off DME Oman. That oil now costs an additional $90 million a month, a state-oil trading executive estimated.
“Oman has become outrageously pricey,” said a trader with an independent Chinese refiner.
The higher benchmark price has been driven by tighter supplies and a push to deliver more oil into a contract in Shanghai, the sources said.
DME Oman crude has averaged a discount to Dubai quotes of $6.34 a barrel so far this month, about $3 a barrel more expensive than the cash Dubai prices set by S&P Global Platts, according to market participants and Reuters calculations.
Saudi and Kuwaiti oil in Asia is priced off an average of DME Oman and Platts Dubai prices.
The price move comes as Oman is set to reduce its output by 285,000 barrels per day (bpd) in May and June as part of an agreement between the Organization of the Petroleum Exporting Countries (OPEC) and its allies to cut production.
Meanwhile, light sour Murban crude, which is usually more expensive than Oman, is now cheaper due to a less favoured product yield, and has became the main grade delivered for the rival Platts benchmark over the past two months.
“DME Oman is a reflection of medium sour crude oil fundamentals in the Middle East,” Raid Al-Salami, managing director of DME said in an e-mail.
Murban flipped to a discount against Dubai paper for the first time ever on March 9 and has maintained its discount, Platts said in an email.
Chinese traders, meanwhile, are hunting for more Middle East crude to fill new storage space listed by the International Exchange Energy (INE) in Shanghai to capitalize on a wide price spread between Shanghai crude oil futures and international oil prices, the sources said.
The INE allows only certain grades of oil, with Basra Light and Oman among the most popular.
Shanghai crude oil futures have maintained a rare premium of nearly $10 a barrel over ICE Brent, thanks to two months’ bidding by Chinese investors betting on a price recovery and limited storage space.
The INE has been adding new storage space and told Reuters on Wednesday it could also include refiners or traders’ tanks as storage warehouses or even floating vessels.
“Excessive speculation on INE contracts has fired up DME Oman prices to an artificially high level,” the state-oil trading executive said, adding that traders were buying Omani crude to deliver into the Chinese contract.
“This is hurting Chinese importers.”
Reporting by Chen Aizhu and Shu Zhang in Singapore, Emily Chow in Shanghai; editing by Florence Tan and Richard Pullin