Dubai crude monthly average above $80/b, Saudi OSPs seen higher
Quantum Commodity Intelligence – The monthly average price for benchmark Middle East Dubai was sharply higher in July versus June, underpinned by production cuts from Saudi Arabia and Russia, firm demand projections and a slight improvement in the economic outlook.
The Quantum average price for Dubai was $80.45/b for September-loading barrels versus $74.97/b on August-loading crude, a gain of 7.3%
On an expiry-versus-expiry basis, Dubai soared from $76.40/b to $85.64/b for a gain of more than 12% and the highest cash price since mid-April. This was also the largest monthly gain since the second quarter of last year, coming after Russia's invasion of Ukraine.
The announced cuts at the beginning of the month set the tone for July, as Saudi extended its voluntary 1 million bpd output reduction into August, while Russia pledged to trim exports by 500,000 bpd.
Although there is no OPEC meeting in August, officials are set to hold an online meeting technical meeting of the JMCC, but no major shift in policy is expected.
Instead, all eyes will be on Saudi Arabia this week for further clues on strategy, particularly with regard to any extension of cuts into September and possibly beyond.
Prices also held up after both the US Fed and European ECB added 25 basis points to rates, amid hopes that borrowing costs could now be paused.
Demand forecasts largely remain bullish with growth seen at over 2 million bpd this year, with revised upwards gains in the US, India and Europe offsetting a below-expectations return from China.
Physical
Premiums for physical barrels also continued to recover from the two-year lows registered in June as flagship medium-sour grades loading in August, including Oman, Upper Zakum and Al Shaheen, consolidated at Dubai swaps +$1.70-$1.90/b in the latter part of July.
Meanwhile, the key M1/M3 Dubai cash spread, closely monitored by Saudi Aramco and other Middle Eastern NOCs, averaged $1.53/b in July compared to $1.10/b in June.
A wider M1/M3 typically signals a hike in Official Selling Prices (OSPs), although the decision will also depend on Saudi output policy, with an extension of 1 million bpd cut into September underpinning any OSP hike.
Asia cash June Brent averaged $79.77/b over the month based on the 1630 Asia close, up 7.25% from last month's average of $74.27/b.
The Brent/Dubai cash spread averaged to an average $0.79/b last month, compared to -$0.01/b in June, having reached a record -$1.55/b in the final week of the month.
US WTI averaged $75.26/b based on the September contract at 1630 Singapore, up from $70.35/b the previous month for a gain of 7%, largely moving in tandem with Brent and Dubai.
For a full Dubai and crude oil pricing history, visit Quantum's pricing pages.
