Refiners in Asia expect the world’s largest oil exporter, Saudi Arabia, to raise the official selling prices for its crude oil going to Asia in January due to stronger winter demand, according to a Reuters survey.
Several major refiners in Asia, the top importing crude oil market, have recently increased spot purchases of crude oil to meet stronger demand as consumption is recovering from the lows seen earlier this year and as winter in the northern hemisphere approaches.
According to the Reuters survey of six refiners in Asia, the buyers of crude expect Saudi Arabia to lift the price of its flagship Arab Light crude grade in January by $0.65 a barrel on average. Forecasts ranged from expected increases of between $0.50 and $0.85 per barrel.
Saudi Arabia typically announces the official selling prices (OSPs) for its crude oil to all regions for the following month around the fifth of each month.
The pricing of Saudi crude oil generally sets the trend for the pricing for Asia of other Gulf oil producers such as the United Arab Emirates (UAE), Kuwait, Iraq, and Iran. The pricing of Saudi Aramco affects as much as 12 million barrels per day (bpd) of Middle Eastern crude grades going to Asia.
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Setting the prices for December earlier this month, Saudi Arabia reduced its OSP for its flagship Arab Light crude grade to its key market Asia as the Saudis appeared unconvinced that near-term demand had much room to grow.
The cut in Saudi prices was in line with Asian refiners’ expectations, who had said in a Reuters survey that they expected either a small cut in prices or flat prices for December compared to November because of weakening refining margins and weakening Dubai benchmark prices.
Over the past month, the Dubai and Oman benchmark prices have strengthened amid stronger demand for spot cargoes, according to data compiled by Reuters.