Top oil exporter Saudi Arabia reportedly is expected to cut prices for most of the crude grades it sells to Asia in October after Middle East benchmark Dubai slumped last month.
Worsening refining margins in China and the wider Asian region are the other factors for the expected price cut, Reuters reported, citing unnamed industry sources.
Saudi Arabia’s oil pricing update
Saudi Aramco, the world’s top crude oil exporter, is expected to cut the official selling price (OSP) of all its crude grades for Asia in October, according to a Reuters survey of five refining sources.
Three of these Reuters sources expect the flagship Saudi crude grade, Arab Light, to be priced $0.50 to $0.70 per barrel lower than the September prices.
A cut of $0.70 would make Arab Light cost Asian refiners $2.00 per barrel above the Oman/Dubai average.
The Oman/Dubai average is the benchmark on which Middle Eastern crude exports to Asia are priced.
The expected drop in Arab Light prices and the prices of the heavier grades could track the weaker Dubai prices in August, according to the refiners polled by Reuters.
However, other refiners expected unchanged or little-changed Saudi crude prices for Asia for October in view of some strength in the Dubai prices in the last week of the trading window of August.
Saudi Arabia typically announces its OSPs for the following month around the fifth of each month and does not comment on the pricing.
Last month, Saudi Aramco raised the price of its light crude for Asian clients for the first time in three months.
Global supply from Saudi Arabia and the Middle East for October could be ample, considering that OPEC+ is dropping hints that it could begin easing part of the production cuts that month.
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