Riyadh – Mubasher: World’s biggest oil exporter Saudi Arabia is forecast to cut its crude oil official selling prices (OSPs) for Asian buyers for the second consecutive month, tracking a drop in Middle East benchmarks and weak refining margins, Reuters reported on Monday citing industry sources.
Seven sources from Asian refineries on average predicted the October OSP for flagship Arab Light crude to fall by $1 a barrel, the biggest monthly drop since May, although forecasts ranged from cuts of 50 cents to $1.80 a barrel.
This month, Middle East benchmarks Dubai and DME Oman differentials declined by around $1.40, trading at discounts to Dubai swaps.
Weak fuel demand because of extended lockdown restrictions as a result of the COVID-19 pandemic have kept market sentiment bearish, but state oil giant Saudi Aramco is expected to reduce its crude OSPs gradually, rather than deliver steep cuts in one-go, one of the sources remarked.
Another two of the sources expected sharper price reductions for lighter grades Arab Extra Light and Arab Light, given that Asia's refining margins for naphtha and middle distillates dropped in August.
