Aramco hikes May OSPs following production cuts
Quantum Commodity Intelligence - Saudi Aramco has increased Official Selling Prices (OSPs) for May-loading crude to Asia, which follows the 500,000 bpd crude cut announced by Saudi Arabia as part of OPEC+ reductions totalling over 1 million bpd.
For Aramco's key customer base in Asia, differentials for the flagship Arab Light grade were increased to Platts Dubai/DME Oman +$2.80/b for loading next month versus +$2.50/b for April cargoes.
Arab Medium was also increased to +$2.80/b from +$2.50/b, while Arab Heavy was set at +$1.25/b versus +$0.75/b for May cargoes, after heavier barrels continued to strengthen with the recovery in high sulfur fuel oil cracks.
May Arab Extra Light was set at $2.80/b over Dubai/Oman, versus +$2.70/b for April.
Prior to the announced production cuts, market watchers had been expecting small OSP reductions after market structure in the underlying Dubai benchmark narrowed last month.
The key M1/M3 Dubai cash spread, closely monitored by Saudi Aramco and other Middle East National Oil Companies (NOCs), averaged $1.65/b in March and around $1.30/b in the 2H of the month, compared to $2.03/b in February, which would usually flag a reduction in OSPs.
But the decision by several OPEC+ members to cut production from May by around 1.15 million bpd has boosted market structure and premiums for Middle East grades, albeit for June barrels, which now top the trading cycle.
The Quantum March monthly average price for Dubai crude was 4.4% lower versus the previous month, averaging $78.49/for May-loading barrels versus $82.10/b on April-loading crude.
For Northwest Europe, Arab Light was unchanged at +$1.00/b versus ICE Brent futures, while Medium was as unchanged at +$0.50/b.
The Brent/Dubai cash spread crunched to an average of around $0.80/b in March, compared to February's average of $1.65/b.
Arab Light for May to the US was up $0.10/b +$6.75/b over ASCI (Argus Sour Crude Index), while Medium was at +$6.95/b and Heavy at +$6.50/b, both up $0.50/b.
