Saudi Arabia has set the August official selling price (OSP) for its flagship Arab Light crude to Asia at $1.50 a barrel below the Oman/Dubai average, an $11 cut from the previous month and the biggest drop in more than two decades, according to a Saudi Aramco pricing statement released on Monday.
Reuters data dating back to 2003 show the reduction is the largest on record. The August OSP is the lowest level since June 2020 and compares with a premium of $9.50 a barrel in the previous month.
The cut exceeded forecasts in a Reuters survey conducted in late June, which had pointed to a premium of $1.50 to $3.00 a barrel. Since then, spot crude prices have fallen further as Gulf producers increased supplies, adding to downward pressure on the market.
The company lowered the Arab Light OSP for Northwest Europe to a premium of $0.85 a barrel to ICE Brent, down $15 a barrel from the previous month. It also cut the price for North American customers to a premium of $4.60 a barrel to ASCI, down $8 a barrel from July.
Meanwhile, OPEC+ agreed a further increase in output targets from August, the group said in a statement on Sunday, adding to global supply at a time when oil prices are falling due to the gradual reopening of the Strait of Hormuz for oil exports.
Term crude supplies to Asia are priced as a differential to the Oman/Dubai average:
AUGUST JULY CHANGE SUPER LIGHT +0.15 +11.15 -11.00 EXTRA LIGHT -1.00 +10.00 -11.00 LIGHT -1.50 +9.5 -11.00 MEDIUM -3.25 +7.75 -11.00 HEAVY -4.60 +6.40 -11.00
Prices at Ras Tanura destined for United States are set against ASCI:
AUGUST JULY CHANGE EXTRA LIGHT +5.95 +13.95 -8.00 LIGHT +4.60 +12.60 -8.00 MEDIUM +3.40 +11.40 -8.00 HEAVY +2.65 +10.65 -8.00
Prices at Ras Tanura destined for Northwest Europe are set against ICE Brent:
AUGUST JULY CHANGE EXTRA LIGHT +2.45 +17.45 -15.00 LIGHT +0.85 +15.85 -15.00 MEDIUM +0.05 +15.05 -15.00 HEAVY -2.35 +12.65 -15.00
Prices at Ras Tanura for Saudi oil destined for the Mediterranean are set against ICE Brent:
AUGUST JULY CHANGE EXTRA LIGHT +2.35 +17.35 -15.00 LIGHT +0.65 +15.65 -15.00 MEDIUM +0.05 +15.05 -15.00 HEAVY -2.65 +12.35 -15.00
(Reporting by Siyi Liu, Ashitha Shivaprasad and Ahmad Ghaddar; Editing by Joe Bavier, Louise Heavens and Susan Fenton)