Saudi Arabia may raise March Arab Light price
A view shows branded oil tanks at Saudi Aramco oil facility in Abqaiq, Saudi Arabia October 12, 2019. REUTERS/Maxim Shemetov Purchase Licensing Rights
Jan 31 (Reuters) - Top oil exporter Saudi Arabia may raise the price for its flagship Arab Light crude to Asia in March, after a drastic cut in the previous month, as the market structure improved amid heightened geopolitical risks.
State oil giant Saudi Aramco (2222.SE) may increase the official selling price (OSP) for its medium sour crude by about 55 cents a barrel for March, according to four respondents surveyed by Reuters.
Aramco slashed the OSP for February Arab Light to a 27-months-low of $1.50 a barrel over Oman/Dubai quotes. Market participants and analysts said the cut reflected more of weaker fundamentals of supply and demand, rather than implying a looming shift in OPEC+ policy or a fight for market share.
OPEC+ will likely decide its oil production levels for April and beyond in the coming weeks, OPEC+ sources said, adding that a meeting of a key ministerial panel on Feb. 1 would take place too early to take decisions on further output policy.
"Middle Eastern crude demand is not bad this month," said one of the respondent. Mideast benchmarks consolidated in January as the escalation of the Red Sea conflicts propelled shipowners to take longer route to haul oil, closing arbitrage windows and supporting demand for regional supplies.
Dubai's monthly change in first- and third-month price spread, a key indicator for Saudi Aramco to set its OSPs, averaged $0.93 a barrel this month, compared to $0.17 a barrel in December, mirroring deepening concerns over tighter supply in the near term.
So far the supply of Mideast crude to Asia has not affected by the Red Sea situation as most oil is shipped from the Persian Gulf via the Strait of Hormuz.
On demand side, Chinese refiners were actively booking crude oil cargoes for delivery in March and April to replenish stocks, locking-in relatively low prices and in anticipation of stronger demand in the second half of 2024.
"Chinese refiners would love to increase the nomination of Saudi crude as long as the prices are not significantly higher than other suppliers'," said an oil trader with a Chinese refiner.
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 9 million bpd of crude bound for Asia.
Saudi Aramco officials as a matter of policy do not comment on the monthly OSPs.
Below are the expected Saudi Aramco official selling prices for March 2024(in $/bbl against the Oman/Dubai average):
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Reporting by Muyu Xu; Editing by Mrigank Dhaniwala
Our Standards: The Thomson Reuters Trust Principles.
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