Asian refiners are expecting Saudi Arabia to reduce further the official selling prices (OSP) of its crude oil in June. If materialized, it would mark a fourth straight month of price cuts after Middle East benchmarks plunged due to squeezed refining margins as the COVID-19 pandemic destroyed demand. Those refiners expect a $3.72/barrel reduction in June OSP for Arab Light crude, according to a survey by Reuters. All surveyed refiners expected a decrease, with prediction ranging from 50 cents-$7.50/barrel.
Saudi Arabia slashed its May OSP for Asian buyers by $2.95-$5.50/barrel, in line with the market’s expectations. The diminishing demand due to the pandemic created a flood of cheap oil in the global market with storage space and floating tanks filling up quickly. At the same time, many refiners in Asia have reduced output as efforts to curb the disease weighed on fuel demand.
Asia’s gasoline and naphtha margins rose in April, while gasoil and jet fuel margins fell to record lows last week. Margins for LSFO remained under pressure, while SSFP margins received a lift from tighter crude supply expectations after OPEC+ agreed to cut supply by 9.7 million bpd from this month.
