Saudi Aramco cuts June OSPs for Asia as refining margins crunch

Quantum Commodity Intelligence – Saudi Aramco has reduced Official Selling Prices (OSPs) for June-loading crude to Asia, reflecting the sharp fall in distillate and gasoline cracks over the past month.  

For Aramco's key customer base in Asia, differentials for the flagship Arab Light grade were reduced to Platts Dubai/DME Oman +$2.55/b for loading next month versus +$2.80/b on May cargoes.

Arab Medium was reduced to +$2.00/b from +$2.80/b, while Arab Heavy was set at +$0.35/b versus +$1.25/b for May cargoes, which were slightly below expectations following the firm recovery in high sulfur fuel oil cracks.

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

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 crunch in refining margins had flipped expectations to a reduction.  

The Quantum April monthly average price for Dubai crude was 6.3% higher versus the previous month, averaging $83.41/for June-loading barrels versus $78.49/b on May-loading crude, with gains racked up in the first half of the month.

For Northwest Europe, Arab Light was set at +$2.10/b versus ICE Brent futures, compared to +$1.00 on May-loading crude, while Medium was hiked by $1.10/b to +$1.60/b.

The Brent/Dubai cash spread crunched to an average of 0.16/b in April, compared to $0.80/b in March, prompting higher Brent-related premiums for Europe.

Arab Light for June to the US Gulf was down $0.50/b +$6.25/b over ASCI (Argus Sour Crude Index), while Medium was at +$6.95/b and Heavy at +$6.50/b, both unchanged.