To benefit from robust premiums for Middle Eastern oil grades and record-high distillate margins, Saudi Arabia may increase its official selling price for crude oil delivered to Asia for the second consecutive month, according to Reuters. According to sources from the refining industry that Reuters surveyed this week, the price for the Kingdom’s premium grade, Arab Light, could increase by $2.40 per barrel in August.
As China started to reopen following the most recent round of Covid-related lockdowns and amid strong demand for middle distillates that drove refiners’ profits to a record high, Saudi Arabia increased its official selling price for July deliveries. The flagship Saudi grade saw a $2.10 per barrel price increase for July supplies to Asia, increasing the total premium of Arab Light to $6.50 per barrel over the Oman/Dubai benchmarks.
In the meantime, global supply is still tight and getting progressively tighter. In light of the ongoing political unrest in Libya, shipments from a crucial oil terminal will be suspended. Earlier this week, Ecuador warned that anti-government rallies may force it to halt all oil output.
OPEC countries Saudi Arabia and the United Arab Emirates, who were once thought to have the most-spare oil production capacity, may actually be considerably closer to their maximum production capacity than previously assumed.
After the last OPEC+ meeting, Saudi Arabia is likely to reveal its official selling prices for August. After the members of the extended cartel agreed last month to increase their monthly increases to total output from around 430,000 bpd to 648,000 bpd in both July and August, changes in the extended cartel’s policy appear unlikely. However, OPEC has so far been unable to add even the first 430,000 bpd.