Oil exporter country Saudi Arabia is being anticipated upon raising the official selling price (OSP) for all oil grades to Asia starting from the month of July, in reason to record Middle East benchmarks from slow margins, as a survey shows. Market are anticipating Saudi to increase the July official selling price for Arab Light crude by around $3.80/barrel, a survey of five refineries shown. The rising predictions are ranged from $2-$3/barrel until $5 a barrel increase as margins weakened in May while showing a stronger DME Oman crude price. These movements are two of the elemental benchmarks for Saudi crude oil prices in Asia, and the upward trend has pushed refiners cost to acquire feedstock. At this rate, refining profit margins worsened to around $1 a barrel as happened in May, market sources disclosed. The current DME Oman crude oil price ranged approximately $3 a barrel more expensive than usual Dubai and Oman prices, thus increasing costs of Saudi Arabian and Kuwaiti oil buyers from Asia.
Production from OPEC led by Saudi Arabia slumping to a two-decades low record last May, therefore any measures are taken to bounce back prices. OPEC+ are also scheduled a meeting later this week to discuss an extension of production cuts beyond June, as market talks have it for presumably another one or two months.
The Middle East tight crude supply has narrowed Dubai’s prompt forwardation price dispersed by $6.60/barrel as reported in May, compared to April level. In forwardation or contango situations, spot prices are lower than in future months. Moreover, respondent opined that light crude oil is presumed to increase more in prices than heavier grades, by the reason of many gasoline and naphtha cracks facilities have improved their efficiency.
Saudi crude official selling prices are scheduled to be released around the fifth of each month. This price level works as basic prices for other Middle Eastern countries such as Iran, Kuwait and Iraq, therefore affecting more than 12 million barrels/day of crude bound prices for Asia.
