Saudi Aramco intends to reduce the official selling prices for Arab crude destined for Asia, during next August, in light of continuing fears of a global economic recession that may affect demand.
A Reuters poll revealed that the Saudi oil giant, the largest oil exporter in the world, may reduce the price of its main Arab Light crude oil to Asia in August, despite the additional production cuts by the Kingdom and the countries of the OPEC + alliance.
A number of Asian refiners expected that Aramco would offer a reduction in the price of a barrel of Saudi oil to its customers in Asia, during the next month, in light of the decline in global oil prices, as well as the increase in Russian supplies to Asia, according to data seen by the specialized energy platform.
Aramco prices
In June, Saudi Aramco unexpectedly raised prices for July loading cargo; What affected the margins of Asian refineries.
And the company violated expectations, during June, and decided to raise the official sale prices of Saudi oil for Arab Light Crude to its customers in Asia during the current month by 45 US cents to $ 3 a barrel above the average prices of the Sultanate of Oman / Dubai, according to the pricing document that was seen by the energy platform. Niche.
To support plummeting global prices due to rising interest rates and fears of a recession, Saudi Arabia volunteered to cut production by 1 million barrels per day in July on top of the broader OPEC+ agreement; To limit supplies until 2024.
The following infographic, prepared by the specialized energy platform, reviews the volumes of voluntary production cuts by OPEC + countries, led by Saudi Arabia, until the end of 2024:
Saudi oil prices
Saudi Aramco is expected to cut its official selling price (OSP) for Arab Light crude in August by about 50 cents a barrel compared to the previous month, according to a Reuters survey of 6 refining sources.
The official selling price for the month of July for Arab Light crude (the main grade for Saudi exports) reached the highest level in 6 months at $ 3 a barrel, higher than the average prices of Dubai and the Sultanate of Oman.
“Saudi Arabia needs to cut prices to reflect market movements,” said one of the respondents. “They have gone a little far from reality in the past few months.”
Profits from the typical Singapore refinery that processes Dubai crude fell to an average of $3.44 per barrel in June from $4.78 per barrel last month.
Respondents said that demand for August loading cargoes, which will arrive at Asian refineries in September, may decline; Some factories are scheduled to be closed for maintenance.
Saudi crude prices usually closely track changes in Dubai’s benchmark monthly price margins, but the two have drifted apart in recent months.
Chinese refineries
Unipec, the trading arm of Sinopec, Asia’s largest refiner and one of the world’s largest buyers of Saudi oil, last month sold an unusually large amount of Middle East crude on the Platts window, a platform used by global pricing agency S&P to set benchmark prices in the world. Dubai.
Unipec sales largely maintained the average June difference between Dubai prices for the first and third months; Prices were little changed from the previous month despite strong demand from PetroChina and Tutsa, the trading arm of Total Energy.
A sudden Saudi production cut in July and subsequent price increases during the peak summer demand season prompted some state-owned refineries in China to cut supply orders as the post-coronavirus recovery stalled in the world’s second-largest economy.
The official selling prices for Saudi crude are usually released on the fifth of each month, and set the trend for Iranian, Kuwaiti and Iraqi prices. Which affects 9 million barrels per day of crude destined for Asia.
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