Saudi Arabia, the world's largest oil exporter, is likely to cut the price of its crude oil sold to Asia for a second straight month in August, following a weaker trend in Middle East benchmark Dubai crude, sources said on Friday.
Asia accounts for about 80% of Saudi Arabia's oil exports, and the possibility of further price cuts to the region highlights the pressure OPEC producers are facing as non-OPEC supply continues to grow and the global economy faces headwinds.
Four Asian refinery sources told Reuters in a Reuters poll that the official selling price (OSP) for flagship Arab Light crude to Asia in August is likely to fall by 60 cents to 80 cents a barrel from July and could fall to its lowest level since April.
Respondents expect prices for heavier crudes (Arab Medium and Arab Heavy) to fall slightly more than Arab Light due to increased supplies from Mexico and Canada.
Relatively high Saudi oil prices prompted Chinese refiners to reduce imports from the kingdom for a third straight month in July.
The potential price cut for Saudi oil in August is seen tracking a narrowing of Dubai crude's spot premium by 85 cents this month from May, a sign of easing supply tightness.
Global crude futures are supported by OPEC+ production cuts and peak demand in the northern hemisphere summer, which is expected to lead to a supply deficit this quarter, but analysts expect supply from non-OPEC producers in the Americas to increase.
Data from the London Stock Exchange Group (LSEG) showed that Singapore's composite refining margin, a bellwether for Asia's refining margins, stabilized at $3.62 a barrel over the past 15 days after falling for two consecutive months.
Saudi Arabia typically releases crude oil export pricing around the 5th of each month and sets trends for prices in Iran, Kuwait and Iraq, influencing the price of more than 9 million barrels per day of crude shipped to Asia.
State oil giant Saudi Aramco sets crude prices by calculating changes in the value of its oil over the past month based on suggestions from customers as well as production and product prices.
The article is forwarded from: Jinshi Data
