Saudi Arabia expects to cut its oil prices in Asia for October

Worsening refining margins in China and the wider Asian region and weaker benchmark prices in Dubai could prompt the world’s top crude exporter Saudi Arabia to cut the price of its October cargo to Asia, a survey showed on Monday. Reuters of refining industry sources.

Saudi Aramco, the world’s biggest crude exporter, is expected to cut the official selling price (OSP) of all its crude grades to Asia in October, according to a survey of five refiners. Three of those Reuters sources expect Saudi crude, Arab Light, to be $0.50 to $0.70 a barrel lower than September prices. A discount of $0.70 would make Arab Light cost Asian refiners $2.00 a barrel above the Oman/Dubai average.

The Oman/Dubai average is the benchmark against which crude oil export prices from the Middle East to Asia are assessed.

The expected drop in Arab Light prices and prices of heavier grades could follow weaker prices in Dubai in August, according to refiners polled by Reuters.

However, other refiners were expecting unchanged or little-changed Saudi crude prices for Asia for October, given some strength in Dubai prices in the final week of the August trading window.

Saudi Arabia usually announces its PSOs for the following month around the fifth of each month and does not comment on price.

Apart from the trend in the Dubai benchmark, Saudi PSOs for next month could be influenced by weak refining margins in Asia, particularly in China, according to refiners polled by Reuters.

Refiners generally expect little change in Saudi crude prices for Asia, but all are expected to be lower compared to September prices.

Last month, Saudi Aramco raised the price of its light crude oil for Asian customers for the first time in three months.

Global supply from Saudi Arabia and the Middle East for October could be ample, with OPEC+ hinting that it may begin to ease some of its production cuts that month.

By Charles Kennedy for Oilprice.com

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