Asian buyers seek full Saudi oil supply despite price hike
Gulf Times
A view of the production facility at Saudi Aramco’s Shaybah oilfield in the Empty Quarter (file). Aramco raised the official selling price for its key Arab Light crude to Asia next month by the most since January after the breakdown of Opec+ talks to boost output.
Some Asian oil refiners are planning to ask for full contractual crude volumes from Saudi Arabia, despite the kingdom jacking up prices for August, as there are few cheaper alternative sources of supply. Saudi Aramco raised the official selling price for its key Arab Light crude to Asia next month by the most since January after the breakdown of Opec+ talks to boost output. Alternative grades from the US, or the North Sea are currently more expensive, leaving refiners without many options to curb rising costs. At least six processors are requesting normal contractual volumes for August-loading cargoes, according to refinery officials who asked not to be identified. One will seek more of the lighter Saudi grade to replace spot purchases from the Atlantic Basin, they said. Buyers are asked to submit so-called nominations by Wednesday, and will be informed of allocated amounts by early next week. “One has to wonder when was the last time you saw the Saudis setting pricing to give refiners a break?” said Vandana Hari, founder of Vanda Insights in Singapore. “It’s possible the Opec+ impasse encouraged them to raise the official selling prices a bit more than what they may have done otherwise.” The collapse of the Opec+ talks means that the group’s output limits will remain in place for August, depriving buyers of extra barrels as the demand rebound from the pandemic accelerates. The physical oil market is showing signs of strength, with the prompt Dubai timespread at the widest backwardation since January 2020. The premium of Oman crude to Dubai swaps has also widened, signalling a bullish outlook for Middle Eastern oil in the Asian spot market. Light-sweet crude from the US that can be delivered to Asia in October is now about $2 a barrel more expensive than similar Middle Eastern cargoes on a Dubai benchmark basis, meaning the arbitrage trade is shut, according to traders. Other official selling prices from major Middle Eastern producers such as Kuwait, Qatar and Iraq will be released in the coming days.More Related News