Saudi Arabia is considering raising the official selling price (OSP) for Arab Light and Arab Extra Light crude in May following the strengthening of Middle East benchmarks. This is driven by a narrowing backwardation structure, rising demand in Asia, and tight supply due to oilfield maintenance and OPEC+ production cuts. The May OSPs are expected to have increases ranging from 20 to 50 cents a barrel.
Top oil exporter Saudi Arabia may raise the official selling price (OSP) for flagship Arab Light crude in May after Middle East benchmarks strengthened last month, industry sources said.
The May OSP for Arab Light crude could rise by 20 to 30 cents a barrel from April, according to a Reuters survey of six refining sources.
The expectation of higher prices comes after the backwardation structure in the Dubai benchmark narrowed by 33 cents a barrel in March versus February, Reuters data showed. When the market is in backwardation, prompt prices are higher than those in future months, implying tight supply.
The May OSP for Arab Extra Light may increase by 30-50 cents a barrel on the back of higher premiums for similar-quality Murban crude from Abu Dhabi, one of the respondents said.
The average premium for May ICE Murban futures to Dubai swaps rose 58 cents to $1.73 a barrel last month, Reuters data showed, buoyed by robust demand in Asia.
Tighter supply for medium and heavy grades due to oilfield maintenance in Saudi Arabia, OPEC+ production cuts and rising domestic consumption in several Middle East producing countries is expected to support May OSPs for Saudi Arabia’s Arab Medium and Arab Heavy, the sources said.
Asian refiners’ losses on high-sulphur fuel oil have also narrowed, underpinning prices for Saudi crude which yields a large portion of the residue. Saudi crude OSPs are usually released around the fifth of each month and set the trend for Iranian, Kuwaiti and Iraqi prices, affecting about 9 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.
The recent news of a potential hike in Saudi Arabia’s May crude oil prices to Asia has raised concerns and speculation across the global oil market. If this decision comes to fruition, it could have significant implications for both regional and international economies. Given Saudi Arabia’s influential position as one of the world’s major oil producers, any adjustment in their pricing strategy reverberates throughout the energy sector and beyond.
The move to increase crude oil prices to Asia would likely be influenced by complex geopolitical, economic, and market conditions. It may reflect efforts to recalibrate export revenues, geopolitical leverage, or respond to evolving demand dynamics in the region. As a key player in the oil industry, Saudi Arabia’s pricing decisions are closely scrutinized by analysts, industry professionals, and governments around the world.
In light of this potential development, market participants are closely monitoring the situation and assessing its potential impact. Such a move could not only affect the cost of energy in Asia but also have broader economic and geopolitical ramifications. It may also impact global trade, inflation, and the energy strategies of other oil-producing nations.
While the details and ramifications of this potential decision are not yet fully clear, the market will undoubtedly continue to analyze and respond to any developments. Understanding the complexities of such decisions and their impact on global energy markets is crucial for businesses, investors, and policymakers alike. As we await further clarity on this matter, it is essential to stay informed and prepared for potential shifts in the energy landscape.
Source: ARY NEWS
Saudi Arabia, the top oil exporter, is anticipated to increase the official selling price (OSP) for Arab Light crude in May as Middle East benchmarks strengthened. The May OSP for Arab Light crude could rise by 20 to 30 cents a barrel, with Arab Extra Light expected to increase by 30-50 cents a barrel. Tighter supply for medium and heavy grades, OPEC+ production cuts, and rising domestic consumption in producing countries is set to support May OSPs for Arab Medium and Arab Heavy. These changes are likely to influence about 9 million barrels per day of crude bound for Asia.
Disclaimer:
This content is AI-generated using IFTTT AI Content Creator. While we strive for accuracy, it’s a tool for rapid updates. We’re committed to filtering information, not reproducing or endorsing misinformation. – Khabristan.pk for more information visit privacy policy
Leave a Comment