Saudi Arabia is expected to slash the official selling prices of its crude loading for Asia in August, as Middle East’s crude benchmarks crashed amid the tentative reopening of the Strait of Hormuz and the oil supply increase from the region.
Saudi oil giant Aramco, the world’s single-biggest crude oil exporter, is expected to slash the OSP of its flagship Arab Light crude by between $6.50 and $8.00 per barrel, a Reuters survey of industry sources showed on Friday.
Refiners polled by Reuters expect the prices of all other Saudi grades, Arab Extra Light, Arab Medium, and Arab Heavy, to be also cut by $6.50 and $8.00 per barrel for August compared to July.
Such cuts to the prices would set Arab Light’s price for Asia for August at a premium of only $1.50 to $3 a barrel above the average Dubai/Oman prices, the benchmark for Middle East oil, off which producers price their supply for Asia.
Set OilPrice.com as a preferred source in Google .
The average price for July loadings of Arab Light was set early this month at a premium of $9.50 per barrel over the average Oman/Dubai quotes, after Aramco slashed the price for July by $6 per barrel compared to June.
The expected additional cut in prices for August would push the Arab Light price down to a four-month low versus the Dubai/Oman benchmarks as Middle Eastern supply rebounds and the physical and futures prices of Oman, Dubai, and Murban crudes crash.
The spot premiums of prices of the Dubai, Murban, and Oman crudes to swaps slumped into discounts last week after the market began pricing in an imminent reopening of the Strait of Hormuz following the tentative U.S.-Iran agreement. This week the Dubai cash premium to swaps and the Oman spread to swaps slumped to their lowest level in six years.
Moreover, supply from the Middle East is rising with major producers including temporarily-desanctioned Iran boosting exports.
Saudi Arabia is also preparing to resume crude loadings at Ras Tanura in the Persian Gulf, which will further boost its supply that currently ships out of the Red Sea port of Yanbu.
Lower oil prices for August could incentivize Asian demand for Saudi crude after months of supply disruptions.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com
- China’s Crude Imports Set to Hit Weakest Level Since 2016
- Kazakhstan Cuts Gas Output after Drone Strike on Russian Processing Plant
- Hormuz Shipping Confidence Is Still Shaky
