Saudi Arabia cut June crude prices for Asia
Friday, May 05, 2023, 11:51 GMT+7
SINGAPORE -- Saudi Arabia, the world's top oil exporter, has cut the price of its June flagship crude to Asian buyers for the first time in four months, following a plunge in refining margins.
The official selling price (OSP) for June-loading Arab Light to Asia was reduced by 25 cents a barrel from May to $2.55 a barrel over Oman/Dubai quotes, according to a statement issued by state oil giant Saudi Aramco.
The cut is less than the market expectation of 40 cents, suggesting that the country is striving to shore up oil prices after the Organization of the Petroleum Exporting Countries and its allies (OPEC+) surprisingly announced an additional output cut from May for the rest of 2023.
Asian refineries are suffering from sluggish processing margins due to high oil prices and oversupply of refined products. A smaller cut of the OSP may prompt some refiners to cut procurements or even lower operations this month.
"May is a crucial month for Asian refiners as some already struggle to reach break-even in their balance sheet. If situation does not improve soon, they would adjust run rates," said a Singapore-based trader.
The market will closely monitor Saudi's June supply of contractual volumes to the term-buyers, due to be revealed next week, and gauge the implementation of OPEC+ cut.
Saudi Arabia also cut the June OSPs of other grades to Asia, with bigger trims than Arab Light. It lowered the prices for Arab Medium by 80 cents and Arab Heavy by 90 cents from the previous month.
"The big price cuts on the heavier grades are unexpected. But that brings the OSPs closer to the spot market prices," said another oil trader.
A number of Asian refiners have scheduled maintenance shutdowns in the second and third quarter, curbing feedstock demand and putting pressure on oil prices.
For other regions, the top oil exporter set its Arab Light OSP to northwest Europe at $2.10 a barrel above ICE Brent for June, up $1.10 a barrel.
Meanwhile, the OSP to the United States was cut by 50 cents from last month at $6.25 versus ASCI for June.
