Aramco slashes Asia OSPs for October, Arab Light cut to +$5.85/b

Quantum Commodity Intelligence - Saudi Aramco has slashed its Official Selling Prices (OSPs) for October-loading crude oil for Asia, largely in line with expectations following a sharp narrowing in the backwardation of the underlying Dubai benchmark and a demand slowdown.

For Aramco's key customer base in Asia, differentials for the flagship Arab Light were set at Platts Dubai/DME Oman +$5.85/b for loading next month, compared to the record +$9.80/b for September cargoes.

The medium sour Arab Light OSP was slightly above premiums for similar grades trading in the spot market during July, with Upper Zakum and Al Shaheen seen as low as +$4/b over October Dubai swaps, although recovered to above Dubai +$5/b towards the end of the month.

Other grades followed suit, with Arab Medium down to $3.75/b from +$7.75/b and Arab Heavy at +$2.20/b versus +$6.00/b in September.

August Arab Extra Light was slashed to $6.45/b over Dubai/Oman, versus a record +$10.95/b in August, reflecting last month's narrower backwardation and poor performance in gasoline cracks.  

The key M1/M3 Dubai cash spread, closely monitored by Saudi Aramco and other Middle East National Oil Companies (NOCs), averaged $4.89/b in August compared to $9.19/b in July and $7.54/b in June, which paved the way for steep cuts in OSPs for October-loading barrels, according to Quantum data.

Quantum's monthly average price for October-loading Dubai was $96.59/b, or a fall of 6.34%. This compares with $103.13/b for September-loading crude and the 14-year high of $113.24/b for August barrels.

For Northwest Europe, Arab Light was fixed a +$4.50/b over ICE Brent futures, while Medium was published at +$0.20/b.

Arab Light crude oil for October to the US was set at +$8/b over ASCI (Argus Sour Crude Index).