Saudi Arabia expected to cut June crude prices for Asia: Survey
Saudi Arabia expected to cut June crude prices for Asia: Survey
09:27     04 May 2021    
Top oil exporter Saudi Arabia is expected to cut its official selling prices (OSPs) for Asia in June, tracking weakness in Middle East benchmark Dubai and demand uncertainty amid a new wave of regional COVID-19 outbreaks, a Reuters survey showed.
Top oil exporter Saudi Arabia is expected to cut its official selling prices (OSPs) for Asia in June, tracking weakness in Middle East benchmark Dubai and demand uncertainty amid a new wave of regional COVID-19 outbreaks, a Reuters survey showed. Sources at five Asian refiners expected the June OSP for flagship Arab Light crude to decrease by an average of 28 cents a barrel, which would become the producer's first price reduction since December last year. Their forecasts tracked a loss in benchmark Cash Dubai's premiums to Dubai swaps, which weakened notably over the second half of April and ended the month at its lowest since Feb. 24. A resurgence in COVID-19 infections in India has hit local fuel demand and dampened market sentiment, causing refineries there to reduce run rates and slow crude purchases in the spot market, two of the survey respondents said. "(What's) more important (is) how first week sales for May will pan out. Basis that call will be taken for (crude) nomination," one of them added. In April, Indian state refiners' local fuel sales declined due to state-level restrictions aimed at stemming a rampant second wave of coronavirus infections, preliminary data showed. Meanwhile, the June Saudi OSPs will have to compete with the prices released by Abu Dhabi National Oil Co (ADNOC) on Sunday, another respondent said. For the first time, ADNOC set the OSP for its flagship Murban crude based on the monthly average of the newly launched Murban futures contract on the ICE Futures Abu Dhabi (IFAD) oil exchange, and released its June OSPs ahead of Saudi Aramco. Asia's refining margins for gasoline, gasoil, jet fuel and 0.5% very low-sulphur fuel oil (VLSFO) strengthened in April, while the naphtha crack weakened. Saudi crude OSPs are usually released around the fifth of each month, and set the trend for Iranian, Kuwaiti and Iraqi prices, affecting more than 12 million barrels per day (bpd) of crude bound for Asia. State oil giant Saudi Aramco sets its crude prices based on recommendations from customers and after calculating the change in the value of its oil over the past month, based on yields and product prices. Saudi Aramco officials as a matter of policy do not comment on the kingdom's monthly OSPs.
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