Saudi Arabia, the world’s top oil exporter, is expected to slightly reduce its crude prices for Asian buyers in April, reflecting a marginal decline in benchmark prices this month, according to traders. A Reuters survey of four Asian refining sources indicated that the official selling price (OSP) for flagship Arab Light crude could drop by 20 to 65 cents per barrel compared to March levels.
Saudi Arabia had raised prices in February and March due to supply disruptions caused by U.S. sanctions on Russia, which drove Asian buyers to seek more Middle Eastern crude. The kingdom also adhered to its production quota under the OPEC+ agreement, further tightening supply.
The survey also suggested that prices for other Saudi grades, such as Arab Extra Light and Arab Medium, could decrease by at least 65 cents per barrel, while Arab Heavy prices might drop by 10 to 65 cents. These adjustments align with the narrowing of the Dubai backwardation, a market structure indicating tight supply, which decreased by 7 cents per barrel in February.
Despite these changes, refining margins in Asia have weakened recently, and China’s imports of Russian Far East and Iranian crude are expected to rebound in March, potentially dampening demand for Saudi oil.
The pricing decision comes as OPEC+ debates whether to proceed with a planned output increase in April or maintain current production levels amid uncertainties caused by U.S. sanctions on Venezuela, Iran, and Russia.
Saudi Aramco, the state oil giant, typically releases its OSPs around the fifth of each month, setting a benchmark for other Middle Eastern producers like Iran, Kuwait, and Iraq. These prices influence approximately 9 million barrels per day (bpd) of crude destined for Asia.
Aramco determines its OSPs based on customer feedback and monthly calculations of crude value, factoring in yields and product prices. However, the company does not publicly comment on its pricing decisions.