The recent attacks by Yemeni Houthis on ships in the Red Sea, purportedly in solidarity with Palestinians against Israel’s military actions in Gaza, have led to escalated freight and insurance costs, hampering Middle East oil shipments to Europe.
The March Arab Light OSP, standing at $1.50, reflects a premium of about 45 cents over the cash Dubai benchmark price in February. This narrowing price gap follows Saudi Aramco’s move to align its OSPs more closely with benchmark prices, as noted by industry sources.
While three sources anticipate Saudi Aramco to maintain prices for all crude grades stable in April, a fourth source predicts reductions of 90 cents and $1 per barrel for Arab Extra Light and Arab Heavy grades, respectively. Another source foresees a 50-cent decrease for Arab Medium crude.
Typically released around the fifth of each month, Saudi crude OSPs serve as a benchmark for pricing decisions by other key producers like Iran, Kuwait, and Iraq, impacting approximately 9 million barrels per day of crude destined for Asia.
Saudi Aramco determines its crude prices based on customer feedback and assessments of changes in the value of its oil over the preceding month, considering yields and product prices. As per policy, Saudi Aramco officials refrain from providing comments on the kingdom’s monthly OSPs.