Refiners expect Saudi to raise oil prices for Asia in November
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Salma Hossein
- . October 3, 2022
- . Update: November 11, 2022 12:33 am
In reaction to signals of improving crude demand in one of its main markets and the fresh round of fuel export restrictions announced by Beijing, Saudi Arabia may increase the pricing for its crude export grades to Asia next month.
Chinese refiners have been given fuel quotas of 13.25 million tonnes for transportation fuels and over 2 million tonnes of extremely low-sulfur fuel oil, which are valid through the end of the year, according to energy consultancy FGE. Additionally, according to FGE, they still have about 7 million tonnes from earlier quota batches.
According to refiners who took part in a Reuters survey, as a result of this increased demand, Saudi Arabia’s official selling prices for its flagship Arab Light oil might increase by $0.25 per barrel.
The increased quotas signal a larger demand for oil in the near future, but on the other hand, refining margins have decreased since the new quotas were announced due to the expectation of a flood of new fuel supplies. As a result, respondents to the survey predicted that prices in Saudi Arabia would only slightly increase.
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After four consecutive months of price increases, Saudi Arabia this month lowered its prices for customers in Asia and Europe. With the exception of heavier and lighter varieties, which will see a $0.50 per barrel increase, Aramco cut the price of its benchmark Arab Light crude to Asia by $3.95 per barrel and to European importers by $2 per barrel.
The price reductions in October followed record-breaking highs for Arab Light in September, when it reached $9.80 over the Oman/Dubai average per barrel and Arab Extra Light sold for $10.95 over that same month. Due to the price reductions, Asian consumers will pay $5.85 more per barrel than the Oman/Dubai benchmark this month.
Around the fifth day of the current month, Aramco typically releases its official selling pricing for the following month. The fifth of this week is also the day of the OPEC+ meeting in October, where participants are anticipated to discuss a significant output cut of at least 1 million BPD.
