Saudi Arabia to Raise Crude Values for Asia Ahead of Q3

Saudi Arabia to Raise Crude Values for Asia Ahead of Q3

Saudi Arabia to Raise Crude Values for Asia Ahead of Q3

  • 31-May-2022 2:27 PM
  • Journalist: Patrick Knight

Saudi Arabia, the world's largest oil exporter, is expected to raise crude prices for Asia to new highs in the first month of the third quarter, owing to strong gains in Middle East benchmarks following global supply disruptions caused by Western sanctions on Russia. According to one industry source, in May, the Official Selling Price (OSP) for flagship Arab Light crude might rise by $5 per barrel on average, to almost $10 per barrel above Oman/Dubai quotations, the grade's highest premium ever.

The Saudi price hikes are likely to follow the strengthening of the spot premium for July-loading Middle East grades this month, as gasoline cracks in Asia reached record highs ahead of the summer season in the US. The prices of Oil have surged above $120 per barrel ahead of an EU conference on sanctions against Russia, which are still under discussion. However, because the European Commission has yet to reach an agreement on a Russian oil embargo as part of the EU's sixth sanctions package for Russia's invasion of Ukraine, price gains may be limited.

China's oil demand is predicted to rise as the number of COVID-19 cases in the country decreases and Beijing and Shanghai are rapidly relaxing their limitations. Meanwhile, OPEC and OPEC+, are expected to stick to an oil production agreement reached last year at their June 2 meeting, despite requests from Western countries to increase output. China and India, the world's top two oil consumers, have been increasing their imports of Russian oil at low rates. Saudi Oil OSPs are normally announced around the 5th of every month, and they establish the price trend for Iranian, Kuwaiti, and Iraqi crude, affecting around 9 million barrels per day of petroleum heading for Asia.

Saudi Aramco, world’s biggest oil giant, sets the pricing patterns for the other major Middle Eastern oil producers, as well as the OSPs for its petroleum for the following month. Considering the Chinese lockdowns and a broad lowering of the crude oil futures curve, the predicted rise in Saudi OSPs for July would occur after prices for June were decreased. The Saudis reduced Asia's June premiums from record highs to regional benchmarks in May.


Track Real Time Prices

Related News

Russia's Rejection of Production Cuts Causes Oil to Drop
  • 26-May-2023 3:30 PM
  • Journalist: Bob Duffler
After a Lean First Half, North American Freight Market Indicates Robust Outlook for the Rest of 2023
  • 25-May-2023 11:01 AM
  • Journalist: Bob Duffler
Fuelling America's Advantage: The Oil Asymmetry That Gives It an Edge Over China
  • 22-May-2023 1:53 PM
  • Journalist: Nicholas Seifield
IEA Assures Stricter Enforcement of Price Caps Will Not Disrupt Oil Supply
  • 22-May-2023 12:43 PM
  • Journalist: Harold Finch