Top oil exporter Saudi Arabia has trimmed just 10 cents off its flagship Arab Light crude price for customers in Asia who buy more than half its crude exports, Saudi Aramco said on Tuesday. Aramco set the Arab Light price for August at Oman/Dubai plus $1.35 a barrel, down from $1.45 for July, and sliced 50 cents off Extra Light crude for Asia to Oman/Dubai plus $2.95 a barrel, the state oil company said.
The minor price adjustment may make it difficult for Riyadh to raise exports despite expectations that Saudi would pump more to meet rising demand in the second half of the year. "You are not seeing aggressive cuts. Relative to the June and July changes, they are more fine-tuning," said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas in London.
Saudi oil minister Ali al-Naimi last month pledged to meet an expected increase in demand in the third quarter after the Organisation of the Petroleum Exporting Countries (Opec) failed to agree a collective output increase in Vienna on June 8. The International Energy Agency (IEA) has since released some of its oil stocks to fill a supply gap before extra Saudi Arabian production reaches the market.
Last month the world's biggest crude exporter cut the Arab Light premium by 70 cents for July cargoes, down from a premium of $2.15 for June cargoes of the key crude sold to Asia. A Reuters poll of oil traders last week predicted Saudi was unlikely to cut deeply enough to lure well-supplied Asian refiners into buying much more of its oil for August. "You will see an acceleration in demand in the second half, so now you are fine-tuning the increments to the cuts you've already made in light of the current economic slowdown," Tchilinguirian said.
The kingdom was planning to pump as high as 10 million barrels per day (bpd) in July, over 1 million bpd more than in May, but that may now be in question. Buyers in Asia, who together consume up to 60 percent of all the crude Saudi exports, have a backlog of Russian ESPO crude to use up, limiting their immediate interest in additional Saudi barrels. Sales to the United States, which together account for less than half total Saudi imports, may rise, however.
Saudi Aramco cut the price of Arab Extra Light crude to US buyers by 65 cents to the Argus Sour Crude Index (ASCI) plus $2.25. Riyadh also raised its Arab Extra Light crude price to the Mediterranean market by 10 cents to the Brent weighted average (BWAVE) price minus $0.95, but it cut the price of the same grade of crude for north-west European buyers by 95 cents to BWAVE minus $1.05 a barrel. A crude oil trader with a Mediterranean refiner said that the hike in prices was likely to deter buyers. "Everything heavy sour is in trouble...they aren't competitive. So the increase in Saudi official selling prices doesn't make sense," he said, adding that similar grades for loading in Iraq were not finding buyers.
Comments
Comments are closed for this article.