By Siyi Liu and Florence Tan
SINGAPORE (Reuters) – Top oil exporter Saudi Arabia may slightly cut its crude prices for Asian buyers in April, tracking the marginal decline in benchmark prices this month, traders said on Friday.
The April official selling price (OSP) for flagship Arab Light crude may decline by 20 cents to 65 cents a barrel from March, four Asian refining sources said in a Reuters survey.
That suggests the April Arab Light price could come at a premium of about $3.25-3.70 a barrel to the average of the benchmark Oman and Dubai prices, down from the $3.90 for March, the highest in more than a year.
The producer hiked prices for February and March as the U.S. sanctions on Russia disrupted supply and prompted Asian buyers to source more oil from the Middle East and other regions. Saudi Arabia also kept to its production quota under a pact by the Organization of the Petroleum Exporting Countries and their allies, a group known as OPEC+.
The March OSPs for the country’s other grades – Arab Extra Light and Arab Medium – are expected to decrease by at least 65 cents, while those for Arab Heavy may fall by 10-65 cents, the survey showed.
These forecasts generally tracked the change in the market structure for the first- and third-month Dubai prices. In February, the Dubai backwardation narrowed by 7 cents a barrel from the previous month, Reuters data showed.
Backwardation is the market structure when prompt prices for a commodity are higher than for future months, indicating tight supply or higher demand.
Still, Asia’s refining margins weakened this week while China’s imports of Russian Far East crude and Iranian oil are set to rebound in March which could depress demand, the respondents said.
OPEC+ is debating whether to raise oil output in April as planned or freeze it as its members struggle to read the global supply picture because of fresh U.S. sanctions on Venezuela, Iran and Russia, eight OPEC+ sources said.Saudi crude OSPs are usually released around the fifth of each month, and set the trend for Iranian, Kuwaiti and Iraqi prices, affecting about 9 million barrels per day (bpd) of crude bound for Asia.
State oil giant 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.
Saudi Aramco officials as a matter of policy do not comment on the kingdom’s monthly OSPs.
Below are expected Saudi prices for April (in $/bbl against the Oman/Dubai average):
March Change est.April
OSP
Arab Extra +3.90 -0.65/-1.00 +2.90/+3.25
Light
Arab Light +3.90 -0.20/-0.65 +3.25/+3.70
Arab Medium +3.25 -0.65 +2.60
Arab Heavy +2.10 -0.10/-0.65 +1.45/+2.00
Source: Reuters, trade
(Reporting by Siyi Liu and Florence Tan in Singapore; Editing by Shailesh Kuber)
