Saudi Arabia is expected to slash again the official selling prices of the crude it will load for Asia in July amid weakening demand and narrowing spot Middle East crude premiums, a Reuters survey of industry sources showed on Friday.
Saudi Arabia, the world’s top crude exporter, is set to cut the official selling price (OSP) for its flagship Arab Light crude loading for Asia in July by $3 to $8 per barrel from June, to a premium of between $7.50 and $12.50 a barrel over the average Oman/Dubai prices, the benchmark for Middle East’s oil, according to the survey.
This would be the second consecutive major price cut of Saudi pricing, after the record-high premium of $19.50 a barrel for loadings for Asia in May, which the Kingdom announced in early April.
Early this month, Arab Light crude loading for Asia in June was priced at $15.50 per barrel above the Oman/Dubai average, down by $4 a barrel compared to the record high $19.50 premium for May.
The Saudi price cut is expected to follow a weakening spot market and spot trades in May. So far this month, the cash Dubai premium to swaps has averaged $8.90 per barrel, compared to an average premium of $13.92 a barrel in April, according to Reuters data. The spot premium for Oman crude has also slid in May, suggesting tepid spot market demand.
Additionally, Brent Crude prices have slumped below the $100 per barrel market this week – and were at $93 in Asian trade on Friday – amid market hopes that the U.S. and Iran could reach a deal.
The industry in Asia expects Saudi Arabia to slash the OSPs of the other Saudi grades, similarly to the cut in Arab Light prices, according to the Reuters survey.
Saudi Arabia typically announces around the fifth of each month its crude pricing for the following month and doesn’t comment on price changes.
By Tsvetana Paraskova for Oilprice.com
