SINGAPORE: Top oil exporter Saudi Arabia may further slash official selling prices (OSPs) for all crude grades to Asia in July, Reuters poll showed, despite looming OPEC+ meeting that could leave door open to further output reduction.

State oil giant Saudi Aramco may cut price for its flagship Arab Light crude by about $ 1 barrel in July, according to seven respondents surveyed by Reuters. That would set July Arab Light price at about $ 1.55 a barrel over Oman/Dubai average, lowest since November 2021. “Refining margins at Asian refineries remain weak and there are still pressures to cut operation rates,” said one respondent.

Profits at typical Singapore refinery processing Dubai crude recovered to an average of $ 4.27 a barrel in May from 81 cents a barrel last month, but still far below $ 10.42 a barrel in January.

Spot premiums for Middle Eastern benchmark crude grades softened over May trading cycle as refiners slowed purchases amidst bearish expectations on demand and margins.

Some Asian refineries, such as Formosa’s Mailiao plant and Thailand’s Bangchak are lowering run rates. While Japan’s Cosmo Oil and Eneos suffer from unit outages which could take months to resume production.

Organisation of Petroleum Exporting Countries and its allies, or OPEC+ are set to meet on June 3-4 to discuss production targets. Just two months ago, group announced an additional output cut of 1.16 million barrels per day starting from May.

Some Asian refiners required less supplies from Saudi Aramco for June-loading cargoes due to high OSPs. Respondents also forecast Arab Extra Light to continue staying cheaper than Arab Light, tracking weak prices of light sour Murban. Saudi Aramco set June Arab Extra Light OSP lower than Arab Light, rare move last seen in June 2021.

Published in The Daily National Courier, June, 01 2023

Like Business on Facebook, follow @DailyNCourier on Twitter to stay informed and join in the conversation.