Saudi Arabia, the world’s biggest oil exporter, may raise its August crude oil prices for buyers in Asia to the highest in four months, after spot prices surged during the Iran-Israel conflict and on robust summer fuel demand, trade sources said.
The August official selling price (OSP) for flagship Arab Light crude may increase by 50-80 cents to between $1.70 and $2 a barrel from the previous month, five sources from four refineries said in a Reuters survey.
Such a rise would place the August Arab Light OSP at the highest level since April, Reuters data showed.
The August OSPs for Arab Extra Light, Arab Medium and Arab Heavy crude are expected to rise 50-60 cents a barrel from July, the survey showed.
A 12-day war that started with Israel targeting Iran’s nuclear facilities on June 13 triggered fears of oil supply disruption on concerns that the Strait of Hormuz, through which about a fifth of global oil flows, may be closed.
The conflict sent oil prices surging to a five-month high and then retreated to pre-crisis levels after a ceasefire.
Middle East benchmarks were also volatile with cash Dubai’s premium to swaps jumping to a near four-month peak of $3.34 on June 19 before closing at $2.73 on Monday.
Dubai’s premium averaged at $1.88 per barrel in June, 61 cents higher than May.
The survey respondents expect Saudi OSPs to largely track the spot market. However, a sixth refining source expects Arab Light to be in line with Oman because of strong demand for term supplies.
Asian refiners have already requested more term crude supplies loading in August and September from Middle Eastern producers.
Refiners are also processing more crude to meet robust summer fuel demand, the sources said.
However, rising OPEC+ supplies could cap price gains.
The Organization of the Petroleum Exporting Countries and their allies are set to announce another big production increase of 411,000 barrels per day for August as it looks to regain market share, four delegates from the group told Reuters.
Saudi Aramco may release its OSPs after the group meets on July 6, some of the sources said.
Saudi crude OSPs set the trend for Iranian, Kuwaiti and Iraqi prices, affecting about 9 million bpd of crude bound for Asia.
Saudi Aramco sets its crude prices based on recommendations from customers and after calculating the change in the value of its oil over the past month, based on yields and product prices.
The company, as a matter of policy, does not comment on the kingdom’s monthly OSPs.
Source: Reuters (Reporting by Siyi Liu in Singapore; Editing by Florence Tan and Himani Sarkar)