Top oil exporter Saudi Arabia has raised the prices for most its crude oil to Asian customers in August for a second month, following its announcement of prolonging an extra output cut on top of a broader OPEC+ deal.
State-owned Saudi Aramco hiked the official selling prices (OSP) for August-loading Arab Light to Asia by 20 cents a barrel from July to $3.20 a barrel over Oman/Dubai quotes, according to people familiar with the matter.
The price increase was largely anticipated by the market, although some Asian refiners surveyed by Reuters before Saudi Arabia’s pledge to extend the production cut were expecting a price slash of about 50 cents amidst poor refining margins and competition with crude from other regions.
Saudi Arabia on Monday announced it would draw out its 1 million barrels-per-day (bpd) voluntary cut to oil production to August and left the door open to extend the trim further.
The de facto leader of OPEC+ group raised its July OSPs to Asia last month shortly after it unexpectedly vowed a 1 million bpd voluntary in July.
The more expensive Saudi oil would further weigh on the thin refining margins in Asia and prompt refiners to seek alternatives from other Middle Eastern suppliers or from regions such as the U.S. and West Africa, considering the spread between Brent- and Dubai-pegged oil has narrowed.
Arab Light has so far proved to be the least competitive grade for Asian refiners, according to a report from Renaissance Energy Advisors published on Tuesday, referring to the refining margins in Singapore.
Saudi Arabia kept the price for Extra Light crude to Asia unchanged in August at $2.55 a barrel over Oman/Dubai quotes, but raised the OSPs for Arab Medium and Arab Heavy by 20 cents, mirroring more robust refining margins for fuel oil, the people said.
