Saudi Arabia may raise June crude prices to Asia
http://www.hrlnews.com/2019/05/saudi-arabia-may-raise-june-crude.html
Top oil exporter Saudi Arabia is expected to raise June prices for
all crude grades it sells to Asia to track stronger Middle East
benchmarks, trade sources said on Thursday.
Saudi Arabia, the largest producer of the Organisation of the
Petroleum Exporting Countries (OPEC), could raise the official selling
price (OSP) for flagship Arab Light crude by 40 cents to one dollar a
barrel, a Reuters’ survey of five refiners showed.
This will make Arab Light crude’s OSP the highest since at least Aug. 2018, Reuters data showed.
Crude oil supplies have tightened after U.S. sanctions on Iran and Venezuela slashed their exports.
Outages in Nigeria, conflict in Libya, and oil contamination issues in Russia have also added to supply concerns.
Demand in Asia, on the other hand, will rebound in the third quarter
as several refineries return from maintenance to ramp up output for peak
summer season.
According to the sources, the price spread between first and
third-month cash Dubai last month widened 75 cents a barrel in
backwardation last month, an indication of strong demand for prompt
cargoes,
For other Saudi grades, the June Arab Extra Light OSP may rise by 80
cents to 1 dollar, while Arab Medium’s OSP may increase by 25 cents to
60 cents a barrel.
The range of price hikes expected for Arab Heavy was wide at 10 cents to 60 cents a barrel.
While fuel oil margins were much weaker last month, heavy crude
demand has become stronger in the absence of supplies from Iran and
Venezuela, the respondents said.
Saudi crude OSPs are usually released around the fifth of each month,
and set the trend for Iranian, Kuwaiti and Iraqi prices, affecting more
than 12 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.