Top world oil exporter Saudi Arabia has cut the official selling price of Arab Light crude in March to customers in Asia and the United States, state oil company Aramco said.

The price of Arab Light to Asia was cut by 25 cents to the Oman/Dubai average minus 15 cents a barrel, Aramco said in a statement on Wednesday. It lowered the price to the United States by 15 cents to Argus Sour Crude Index minus 75 cents.

Saudi Arabia was expected to raise prices of all its crudes heading to Asia for March on healthy fuel oil cracks and improving refining margins, after cuts last month, traders said on Monday.

Refinery maintenance in Asia and lower seasonal demand in the second quarter were probably the main reasons for the surprise cut, traders said.

“I think the Saudis are wisely anticipating a slowdown in demand in the second quarter,” a trader said.

The introduction of the Russian ESPO Blend crude into the Asia-Pacific market from January and increasing purchases of the grade by refiners in South Korea and Japan may have exerted some pressure on Saudi Arabia to lower prices for the lighter grades, some traders said.

“The Saudi OSP was quite a surprise,” one said. “I was wondering whether it can be ESPO having an overall effect in the region. Its quality is not so bad, so everybody is very interested.”

Exports to Europe

Saudi Arabia raised the price of Arab Light to northwest Europe by 15 cents to BWAVE minus $1.65 a barrel.

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 Saudi prices set the trend for Iranian, Kuwaiti and Iraqi prices, affecting some 7 million barrels per day (bpd) of crude bound for Asia, which is expected to drive future global oil demand growth.
Source: Khalleej Times