Singapore — Top oil exporter Saudi Arabia is expected to raise prices across various grades of crude oil it sells to Asia in September for a second straight month, tracking the strength in Middle East benchmarks, trade sources said.
The September official selling price (OSP) for Arab Light crude may rise by 36 cents a barrel on average after hitting a 17-month high in August, a Reuters survey of sources at six Asian refineries showed. Asia’s demand for light crude is robust, supported by strong margins for gasoline and naphtha.
One of the sources said medium and heavy crude supplies could improve which may prompt Saudi Arabia to cut prices for Arab Medium and Arab Heavy to stay competitive. The other respondents expect prices for these two grades to rise, but by a smaller extent than light grades.
Production cuts by the Organization of the Petroleum Exporting Countries and their allies have helped global crude prices to recover.
Preliminary assessment by Refinitiv showed that Saudi exports were at 6.6 million barrels per day in July, 11.8% higher on year and just under the volume of July 2019, before the pandemic.
However, just as Saudi crude supplies recovered, demand growth from China, the world’s largest importer, is slowing after Beijing cracked down on trading of import quotas. Saudi crude OSPs are usually released around the fifth of each month, and set the trend for Iranian, Kuwaiti and Iraqi prices, affecting more than 12 million barrels per day (bpd) of crude bound for Asia.
State oil giant Saudi Aramco sets its crude prices based on recommendations from customers and after calculating the change in the value of its oil over the past month, based on yields and product prices.
Saudi Aramco officials as a matter of policy do not comment on the kingdom’s monthly OSPs.
- Reuters (Reporting by Florence Tan; Editing by Joe Bavier)
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