HomeBusinessSaudi Arabia may shave light crude prices to Aisa in February

Saudi Arabia may shave light crude prices to Aisa in February

Reader's Pick

Saudi Arabia, the world’s biggest oil exporter, may cut the prices of its light crude grades sold to Asia in February on signs of slowing demand ahead of the region’s peak refinery maintenance season, six trade sources said on Monday.

The official selling price (OSP) of flagship Arab Light crude in February could fall by 20-30 cents a barrel, four of six respondents in a Reuters survey said. State oil company Saudi Aramco raised the Arab Light OSP to the highest in six years in January, the fourth month of increases.

Aramco may cut the OSP as the price structure for Middle East crude benchmark Dubai indicated falling crude demand in February as cargoes loading that month are likely to arrive when Asian refineries begin shutting for maintenance in March, the sources said.

The average backwardation between the first and third month cash Dubai price so far this month narrowed by 15 cents from the previous month, Reuters data showed. In a backwardated market prompt prices are higher than those in future months.

- Advertisement -

The OSPs are also likely to drop as the gross product worth, which measures the value of a crude in terms of the fuels it yields after refining, for Saudi oil grades are lower than last month because of falling refining margins, one of the respondents said.

“Refining margins are under pressure,” he said.

Arab Extra Light may see a bigger price cut in February after naphtha cracks weakened this month, the sources said.

However, firm demand for January-loading cargoes and rebounding fuel oil margins will support the OSPs for heavier Saudi oil, they said.

- Advertisement -

Most of the survey respondents expect the February OSP for Arab Medium to remain unchanged or drop slightly while the view was split between an expected price hike and price cut for Arab Heavy.

Supplies of these grades could remain tight as demand from new Chinese refineries will continue to rise in 2020 even as Saudi Arabia and Kuwait are working on resuming output from their joint production in the Neutral Zone between them. 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.

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.


Stay on top of Budget 2023 with our newsletter

We don’t spam! Read our privacy policy for more info.

- Advertisement -

Read latest Business News and Startup news on TechGraph. Watch live and latest news on TechGraph TV. Follow us on Facebook or follow us on Twitter and Instagram. Listen audio news from TechGraph Briefings on Spotify, Google Podcast, Amazon Music & on Apple Podcast.

Krishna Mali
Krishna Mali
Founder & Editor of TechGraph.

Latest News

Promoted Links

Related Stories

Sino-US trade war offers Europe’s chance to bank more Chinese reserves: Analysis

Should European countries want the euro to replace the dollar as the world's do...

Japan approves 26 trillion yen as economic stimulus package to combat overseas risks

Japan's cabinet approved an economic stimulus package worth 26 trillion yen ($2...

1Win App: Review India Apk for Android and iOS

The company 1Win has been successfully operating in the markets of many countri...

Employees union seeks FIR against Jet Airways boss Naresh Goyal, Vinay Dube and on SBI Chairman

The employee union of Jet Airways, which is facing its worst crisis, Friday sou...

Samsung Electronics asks its shareholders to use electronic voting for upcoming AGM

Technology giant Samsung Electronics has adopted electronic voting for the firs...

Rahul Gandhi hits on RCEP says, ‘Make in India’ has become ‘Buy from China’

Asserting that "Make in India" has become "Buy from China," Congress leader Rah...

NASA astronauts to carry first ever all-female spacewalk on 29 March

Two NASA astronauts are scheduled to carry out the first ever all-female spacew...

Logistics 4.0: Creating a value chain through smart interconnected technologies

Businesses are keeping up with the changing digital environment to stay competi...

Budget 2022-23: Technology, SaaS, AI & ML Sector Reactions

Technology market reaction on Budget 2022-23: As Finance Minister Nirmala Sitha...

Bitcoin Price Crash

Bitcoin crypto was launched in 2009. It was the beginning of the digital assets...