Saudi Arabia has raised the official selling prices (OSPs) for its crude oil sold to Asia, Northwest Europe, and the Mediterranean in June, signaling expectations of strong demand this summer. The world’s top exporter hiked its flagship Arab Light crude oil price to Asia to $2.90 a barrel above the Oman/Dubai average, the highest since January. It also raised the June Arab light crude prices to northwest Europe and the Mediterranean to $2.10 and $2 a barrel above ICE Brent, respectively, while keeping the price in the United States unchanged at $4.75 a barrel above ASCI.
The price hikes for most Saudi crude grades in Asia were at the higher end of traders’ expectations in a Reuters survey. Some traders questioned the ability of Asian refiners to absorb higher Saudi crude costs as refining margins in Asia dropped nearly $2 a barrel in April from March.
State oil giant Saudi Aramco sets its crude prices based on recommendations from customers and after calculating the change in the value of its oil over the past month, based on yields and product prices. Saudi crude OSPs set the trend for Iranian, Kuwaiti, and Iraqi prices, affecting about 9 million barrels per day (bpd) of crude bound for Asia.