Saudis have increased OSPs less than expected
Saudi Arabia caps July crude price hikes to Asia in market share fight
SINGAPORE/ABU DHABI, June 6, 2016
Top oil exporter Saudi Arabia raised prices for most crude grades it sells to Asia, but kept them at the lower end of expectations to stay competitive in a battle for market share.
The moderated price increases came after state oil giant Saudi Aramco offered more crude to term customers in Asia last month as it ramps up output from an expanded field.
"Saudi increased the OSPs (official selling prices) less than expected," said a trader with a North Asian refiner.
A 250,000 barrels-per-day (bpd) rise in Arab Extra Light crude output due in July is the main factor capping any price hikes, the trader said.
Saudi Aramco said it has raised the July price for its Arab Light grade for Asian customers by $0.35 a barrel to a premium of $0.60 to the average Oman/Dubai quotes. The producer had been expected to raise the price by 25-50 cents a barrel, a Reuters survey of refiners and traders showed.
Saudi Aramco said in late May it plans to increase oil output from its Shaybah field over the first half of June to around one mbpd.
The producer kept the July OSP for Arab Extra Light unchanged, against expectations of an increase by 10-50 cents. The crude, which has a relatively higher naphtha yield, is mostly exported to Asia.
Japan typically buys more than half of the Arab Extra Light output, excluding the Shaybah field expansion, with an average import volume of 411,000 bpd in the first four months this year. O/JAPAN1
"It helps (Arab Extra Light) to compete with Adnoc's (Abu Dhabi National Oil Company's) light grades," a second trader said of Saudi Aramco keeping the grade's OSP unchanged.
Adnoc is expected to announce early this week its OSPs for Murban and Das and it may cut their differentials to Dubai quotes to stay competitive.
Separately, Saudi Aramco lowered its July official selling price (OSP) for Arab Light to northwest Europe by $0.35 a barrel to a discount of $4.80 a barrel to the Brent Weighted Average (BWAVE).
In the United States, Saudi Aramco raised the July OSPs for three of the four grades, cutting only the OSP for Arab Extra Light by 30 cents a barrel. -- Reuters
