Saudi Arabia lowers official selling price of its Arab Light crude ‎oil to Asia during June

Saudi Arabia, the world’s largest oil exporter, lowered its benchmark June crude price for Asian buyers for the first time in four months after refining margins fell.

According to “Reuters”, a statement issued by the giant Saudi oil company, Aramco, stated that the official selling price of Arab Light crude for June loading to Asia was reduced by 25 cents a barrel compared to May, at a premium of $2.55 a barrel above the average prices of Oman and Dubai crude.

This is less than market expectations of a 40-cent cut, which indicates that the Kingdom is striving to support oil prices after the Organization of the Petroleum Exporting Countries and its allies in what is known as the OPEC + group suddenly announced an additional reduction in production from May until the end of this year. ,

Asian refineries are suffering from stagnant refining margins due to high oil prices and an oversupply of refined products. A lower cut to the official selling price may prompt some refineries to reduce purchases or even cut operations this month

“May is a crucial month for Asian refiners, as some of them are already struggling to break even on their balance sheets,” said a Singapore-based trader. If the situation does not improve soon, the operating rates will be adjusted.”

The market will closely monitor the Saudi supply in June of the contractual volumes of buyers with fixed-term contracts, which is scheduled to be disclosed next week, to measure the extent of the Kingdom’s implementation of reducing its production within the framework of OPEC +.

Saudi Arabia also reduced the official selling prices for other crudes to Asia in June, more compared to the reduction in the price of Arab Light crude. It reduced the price of Arab Medium crude by 80 cents and Arab Heavy by 90 cents from the previous month.

Another trader in the oil sector said, “The large price cuts for heavier grades are not expected, but they bring the official selling prices close to the spot market prices.”

For other regions, the kingdom set its official price for Arab Light crude for Northwest Europe at a premium of $2.10 a barrel over Brent crude prices in June, up $1.10 a barrel.

At the same time, it cut its official selling price (OSP) for the United States by 50 cents from last month at $6.25 against the benchmark Argus sour crude for June.