Energy Saudi Arabia may raise Arab Light price to 10-month high By Reuters August 30, 2023 Reuters/Nick Oxford Headquartered in Khobar, Ades operates a fleet of offshore and onshore rigs across the Middle East, North Africa and India Saudi Arabia may raise prices of all crude grades it sells to Asia in October. The world’s top oil exporter is expected to extend its voluntary output cut for a third month, keeping sour crude supply tight and prices elevated. The October official selling price (OSP) for flagship Arab Light crude could increase by about 45 cents per barrel from the previous month, according to five refining sources surveyed by Reuters. This would be the grade’s highest price so far this year. Saudi oil exports lowest since September 2021 Saudi gas boost to benefit petrochemicals and oil trade Oil cuts drag down Saudi industrial activity Market participants and analysts expect Saudi Arabia to extend a unilateral voluntary production cut of one million barrels per day (bpd) to October as the kingdom targets drawing down global inventories further. Middle East benchmarks have been strengthening since June on supply tightness worries and resilient oil demand. Dubai’s monthly change in first- and third-month price spread has averaged $2.05 a barrel this month, compared with $1.57 a barrel in July, reflecting a deepened backwardation and tighter supply in the near term. Respondents also expect state oil giant Saudi Aramco to increase the prices of other grades on forecasts of stronger demand as most Asian refiners are seen resuming production in the fourth quarter after maintenance. “All the price assessments are conducted based on the expectation that Saudi will prolong the cut to defend oil prices. But higher OSPs could prompt some refiners to take less cargoes and find cheaper alternatives,” said one respondent. As the spread between Brent and Dubai narrows to near parity, hauling crude from the Atlantic Basin and Americas is economical for Asian refiners. Saudi Aramco’s OSPs are usually released around the fifth of each month, and set the trend for Iranian, Kuwaiti and Iraqi prices, affecting about nine million bpd of crude bound for Asia. Saudi Aramco officials as a matter of policy do not comment on the monthly OSPs.
