Saudi Arabia has announced an increase in the official selling price (OSP) for its Arab Light crude oil to customers in Asia and the Mediterranean for the month of May. According to a statement from Aramco, the OSP for Asian buyers now stands at a $2.00 premium to the Oman/Dubai average, marking a 30-cent rise from the April price.
The adjustment in the Arab Light price for Asia aligns closely with market expectations, with a Reuters survey of refining sources predicting a price increase of 20 to 30 cents per barrel compared to April.
In the Mediterranean region, Aramco has set the OSP for the grade at ICE Brent minus 10 cents for May, a narrower margin compared to the 20-cent discount in April. Meanwhile, prices for Arab Light crude oil for Northwest European and U.S. customers will remain unchanged in May.
Aramco notably raised prices for heavier grades in May, attributing the decision to factors such as oilfield maintenance in Saudi Arabia, OPEC+ production cuts, and increased domestic consumption in various Middle East producing countries. These developments were anticipated to bolster May OSPs for Saudi Arabia’s Arab Medium and Arab Heavy grades.
Asian refiners have also experienced reduced losses on high-sulphur fuel oil, contributing to the support of Saudi crude prices, given its significant residue yield.
Saudi Aramco determines its crude prices based on customer feedback and evaluations of changes in the value of its oil over the preceding month, taking into account yields and product prices.
The Saudi crude OSP adjustments have a ripple effect on pricing strategies adopted by Iran, Kuwait, and Iraq, impacting approximately 9 million barrels per day (bpd) of crude oil destined for Asian markets.