Earlier on Monday, India issued its third spot import tender for June crude which is expected to keep Dubai prices buoyed and so support the Middle East complex. Abu Dhabi issued notices late last week announcing a 10 per cent cut in allocations for June. June is seasonally a weak month for demand, but the global producer cuts are having a noticeable effect on supply, traders said.

They said buyers have moved quickly to secure medium grades for June lifting, with Oman trading well above MOG +20 cents and now offered nearer MOG +30 cents, they said. One European major estimated that 20 Oman cargoes had already changed hands, indicating that the Oman market would be tight for the rest of the trading month.

India may lookincreasingly to the spot market for its ballooning requirements. It is expected to bring on one million barrels per day (bpd) in refinery capacity by the end of December. Hojatollah Ghanimi Fard, director for international affairs for the National Iranian Oil Co (NIOC) said at the weekend that Iran was not able to supply any extra crude to India at the moment owing to its pledge to keep production down at 3.359 million bpd.

If reflected by other Middle East suppliers, India will look to oil majors or traders to supply its needs. Traders said they expect India to keep pressure on the June market. Reliance Petroleum's 540,000 bpd Jamnagar refinery is expected to start commissioning in June and other refinery capacity in India is due on line in the months that follow.

The Asian light sweet market has cooled somewhat. Benchmark Tapis premiums have come off their recent peak, as demand for arbitrage kerosene into the US West Coast has abated.

Physical May Tapis traded at a premium of 35 cents, but playerspegged the market now around 15 to 20 cents premium. However, they said they expected support at those levels.