Saudi Arabia, which sets the pricing trend for most Middle Eastern oil exporters, usually announces its prices for the next month around the fifth of each month and as a policy does not comment on price movements. The Kingdom usually sets official selling prices (OSP) for the following month after the monthly OPEC+ meeting. The next group meeting is scheduled for September 5.
Saudi Arabia’s September crude to Asia forms at a steep premium to benchmark Dubai/Oman as the Kingdom raised the price of its flagship Arab Light by $0.50 a barrel to a record high of $9.80 dollars per barrel against Oman/Dubai.
According to five refining sources in a Reuters poll on Monday, Saudi Arabia could cut Arab Light prices in the key Asian market by an average of $4.50 a barrel for October loadings. Refiners expect the October Arab Light price to be between $3.85 and $6.30 per barrel versus Oman/Dubai.
There are two reasons for the expectation of much lower premiums relative to Middle Eastern benchmarks. The first is the fear that demand will not be strong due to concerns about an economic slowdown. The other is the narrowing of the spread between Dubai-bound and Brent-bound cargoes, which has limited demand for cargoes tied to the Dubai benchmark, from which Middle East crude is priced. East for shipments to Asia.
In addition, demand for cheaper crude oil from West Africa and the US could also reduce perceived tightness in the Asian crude market, a refining source told Reuters.
Another source said some of the Saudi crude originally sent to the West is now returning to Asia because of insufficient European demand.
By Tsvetana Paraskova for Oilprice.com
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