Saudi Arabia is expected to raise the price of its flagship crude loading for Asia in August to a four-month high as demand strengthens in the summer and buyers seek more term supplies amid volatile spot prices.
Saudi oil giant Aramco, the world’s top crude exporter, is set to raise the price of its Arab Light crude in Asia for August by between $0.50 and $0.80 per barrel to up to $2.00 a barrel over regional benchmarks, according to a Reuters survey of five Asian refining sources.
Last month, Saudi Arabia reduced its official selling prices (OSPs) for Asia for July after OPEC+ decided to proceed with unwinding of the production cuts.
This month, however, demand is strong among Asian buyers in the peak summer season.
Moreover, refiners in Asia have reportedly asked for additional oil supply under term contracts this summer as the conflict between Israel and Iran hiked premiums for spot supply, and left spot prices volatile after the ceasefire announced following the U.S. strikes on Iranian nuclear sites.
The Saudis are expected to raise the August prices for Asia not only for the flagship Arab Light grade, but also for the Arab Extra Light, Arab Medium, and Arab Heavy crudes, by about $0.50-0.60 per barrel compared to July, according to the Reuters survey.
Saudi Arabia typically announces around the fifth of each month its crude pricing for the following month and doesn’t comment on price changes. It also sets the tone for the pricing in Asia of the other major oil producers in the Middle East.
This month, the Kingdom could announce the OSPs for the following month after July 6, when OPEC+ producers are slated to meet to decide the production levels for August.
OPEC+ will make its August oil production decision on the fly during the upcoming July 6 meeting, Russia said on Friday, suggesting there would be no pre-negotiating behind closed doors.
By Tsvetana Paraskova for Oilprice.com
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