Prime oil exporter Saudi Arabia may reduce prices for most of the crude rates it sells to Asia for a second consecutive month in September after Middle East benchmark costs decreased.
The official selling price (OSP) for benchmark Arab Light crude may slip by a minimum of 50 cents per barrel, falling below a premium of $2 a barrel for the first time in four months, a survey of five customers in Asia confirmed.
The cuts would track a backwardation between prompt and third month Dubai costs that narrowed by 70 cents per barrel in July compared to June. Spot prices are higher than those in future months in a backward-dated market.
Asia’s incremental demand for September-loading Middle East crude decreased in July with several North Asian refineries scheduled to close for maintenance during their autumn season.
Robust fuel oil margins; however, are prone to support costs for heavier grades that produce more of the residual fuel, survey respondents mentioned.
Two of the five respondents count on Arab Heavy crude’s OSP to stay firm in September, while a lot of the respondents stated Arab Medium’s September OSP might drop by 20-40 cents per barrel.
Saudi Arabia’s crude OSPs are usually released around the fifth of each month, and set the pattern for Iranian, Kuwaiti and Iraqi costs, affecting over 12 million barrels per day (BPD) of crude bound for Asia.
State oil titan Saudi Aramco sets its crude costs based on suggestions from customers and after calculating the change in the worth of its oil over the last month, based on gains and product costs.
Saudi Aramco delegates as a matter of policy don’t comment on the dominion’s month-to-month OSPs.