Kuwait reduces June OSP for KEC, follows Saudi Arab Medium

Quantum Commodity Intelligence – Kuwait has reduced its Official Selling Prices (OSPs) for its key export grade loading in June, largely tracking the reductions announced by Saudi Aramco earlier in the month.

KPC sets its flagship Kuwait Export Crude (KEC) at $1.70/b over the average of Platts Dubai/DME Oman quotes, compared to $2.40/b for May.

Kuwait Super Light Crude (KSLC) was set at $1.80/b over Dubai/Oman quotes for June versus $2.50/b for May-loading barrels.

The OSPs were largely in line with expectations after Saudi Arabia reduced its flagship Arab Light grade to Platts Dubai/DME Oman +$2.55/b for loading next month versus +$2.80/b on May cargoes, while Arab Medium was reduced to +$2.00/b from +$2.80/b.

Arab Extra Light was set at $2.10/b over Dubai/Oman, versus +$2.80/b for May, reflecting weaker distillate and gasoline cracks.

Earlier this week, Iraq set the OSP for Basrah Medium to Asia at Platts Dubai/Oman -$0.15/b, while Basrah Heavy to Asia was increased by $0.10/b to minus $3.30/b, with heavier barrels supported by the rebound in HSFO cracks.

In line with most Middle East crude, Kuwait cargoes are sold two months forward but priced against assessments published in the month of loading, so OSPs include two months of market structure.

The key M1/M3 Dubai cash spread, closely monitored by Saudi Aramco and other Middle East National Oil Companies (NOCs), averaged $1.78/b in April compared to $1.65/b in March.

A wider spread would usually flag a small increase in OSPs, but the broader crunch in refining margins last month flipped expectations to a reduction.  

So far in May, the M1/M3 Dubai cash spread has averaged $1.44/b, according to Quantum data, an early indication that Middle East OSPs could see further reductions on July-loading cargoes, although the recovery in refining margins should lend some support.