Saturday, 3 June 2023

Saudi Arabia may lower crude prices to Asia for 4th straight month

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Saudi Arabia, the world’s largest oil exporter, may trim prices for crude grades sold to Asia for a fourth straight month in March, amid low physical oil premiums, as oversupply worries linger despite expectations of demand recovery in China.
State oil company Saudi Aramco may lower the official selling price of its flagship Arab Light crude by about 30 cents to Asian clients for March-loading cargoes, a Reuters survey of four refining sources showed.
That would reduce the overall differential to around $1.50 a barrel above the average of Platts Dubai and Dubai Mercantile Exchange’s Oman quotes, the lowest since November 2021.
“The overall demand for medium-grade oil in Asia remains tepid, and China’s consumption may not come back in the near term,” said a Singapore-based respondent.
The top oil importer China is projected to see a fuel demand revival as Beijing rolled back the stringent zero-COVID strategy, although the path of recovery could be bumpy given the country’s surging infection cases.
China’s oil trading giant Unipec has snapped up low-priced supplies of crude from Abu Dhabi, Brazil and North America in January.
However, the supply overhang remains clouding the Asian market as China and India continue to scoop up discounted Russian barrels.
The European Union is set to ban Russian oil products imports from Feb. 5, which is expected to curb Russia’s oil processing and lead to more crude oil exports.
Oil climbs after drone attack in Iran, China’s pledge to promote consumption
The Organization of the Petroleum Exporting Countries (OPEC) and allies, known as OPEC+, is likely to maintain the current oil output policy of lowering production by 2 million barrels per day amid worries over a global recession.
The respondents expected prices of the heavier grades, Arab Medium and Arab Heavy, to see bigger cuts as the refining margins of fuel oil weakened.
Saudi crude OSPs set the trend for Iranian, Kuwaiti and Iraqi prices, affecting about 9 million barrels per day (bpd) of crude bound for Asia.
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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