Saudi Aramco lifts July OSPs for Asia, Arab Light at +$3/b

Quantum Commodity Intelligence – Saudi Aramco has offered a surprise increase in its Official Selling Prices (OSPs) for July-loading crude to Asia, with the move coming despite the announcement this weekend of more output cuts.

For Aramco's key customer base in Asia, differentials for the flagship Arab Light grade were raised to Platts Dubai/DME Oman +$3/b for loading next month versus +$2.55/b on June cargoes.

It comes after Saudi officials announced output cuts of an additional 1 million bpd in a bid to shore up demand and boost prices, with trader surveys having expected a cut of at least $0.50/b.

Sources said the 1 million bpd cut in July could mean some Asian term customers will only be supplied minimum term volumes next month, which would be 5% below baseline levels.

Arab Medium was raised to +$2.45/b from +$2/b, while Arab Heavy was set at +$0.80/b versus +$0.35/b for June cargoes, with Chinese demand for residual fuels having kept high sulfur fuel oil cracks near one-year highs.

Arab Extra Light was set at $2.55/b over Dubai/Oman, versus +$2.10/b for June, reflecting a recent recovery in 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 $1.04/b in May compared to $1.78/b in April.

Last month, premiums for physical barrels tumbled to around two-year lows, including Qatar awarding its closely-watched Al Shaheen tender at premiums ranging from Dubai +$0.80-$1.05/b.

The Quantum average May price for Dubai was 10.17% lower versus the previous month, averaging $74.93/for July-loading barrels versus $83.41/b on June-loading crude, as fears over a global economic slowdown intensified.

For Northwest Europe, Arab Light was set at +$3/b versus ICE Brent futures, compared to +$2.10 on June-loading crude, while Medium was set at +$2.50/b versus +$1.60/b for June.

The Brent/Dubai cash spread crunched to an average of 0.16/b in May, compared to $0.85/b in April, prompting higher Brent-related premiums for Europe.

Arab Light for July to the US Gulf was up $0.80/b at +$7.15/b over ASCI (Argus Sour Crude Index), while Medium was at +$7.85/b and Heavy at +$7.40/b, both unchanged.