A survey of expectations of five Asian refiners published yesterday shows that Saudi Arabia could hike the price of its flagship crude grade going to Asia in September to a record-high premium over benchmarks.
Saudi Aramco, the state oil giant of the world’s top crude oil exporter, is expected to lift the official selling price (OSP) of its flagship Arab Light grade for September loadings for Asia by $1.50 a barrel compared to the August price, per the median estimate in the Bloomberg survey.
Thus, Arab Light could be sold in Asia next month at a premium of $10.80 a barrel over the Dubai/Oman benchmark, off which the Middle Eastern crude to Asia is priced. This would be an all-time high premium for Arab Light prices in Asia.
Saudi Arabia, which sets the pricing trend for most Middle Eastern oil exporters, typically announces its prices for the following month around the fifth of each month, and as a policy, it doesn’t comment on the price movements. The Kingdom usually sets the OSPs for the following month after the monthly OPEC+ meeting. The group’s next meeting is scheduled for August 3.Â
Last month, Saudi Arabia raised again the price of its oil for Asia in August to close to record differentials, in a widely expected move that tracked strong refining margins and expectations of robust demand. The price of Arab Light to Asia in August was raised by $2.80 a barrel to $9.30 per barrel over Dubai/Oman.
This was just five cents lower than the current record-high differential of $9.35 a barrel premium over Oman/Dubai from earlier this year.
However, Asia could see lower refining processing rates—and lower crude demand—from October onwards, in light of the lower seasonal demand and falling refining margins, traders told Bloomberg.
Refining margins in Asia have declined by over 70 percent for gasoline and by 39 percent for diesel since the end of June, crude traders in Asia tell Bloomberg.
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