Aramco increased the oil price for Arab Extra Light by $2.20-a-barrel to $4; above the Oman-Dubai benchmark to Asia for December. Saudi Arabia exports over 60 percent of its crude to Asia.
Asian buyers will probably take their entire contractual volumes of oil from Saudi Arabia for next month on solid fuel demand and higher margins, despite the jacked-up oil price to the region.
Saudi Aramco raised pricing for all crude grades is higher than expected to Asia for December. This increase is after OPEC+ stuck to its plan for a modest supply restoration, despite calls for an increase. With elevated demand – especially for the lighter varieties traders said buyers are likely to request full supply.
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Asian refining margins, too, have surged over the last couple of months with the recovery of economic activity. Margins for gasoline and naphtha have risen the most, followed by diesel; increasing the interest in the less-sulfurous crudes used to produce them.
The physical spot market has reflected this, with the lighter Murban’s premium over Dubai; crude jumping to more than $5 a barrel oil price this month. Spot differentials for Russia’s Sokol and ESPO grades also surged in October.
Aramco raised the price for Arab Extra Light by $2.20-a-barrel to $4 above the Oman-Dubai benchmark to Asia for December. That’s the most significant increase in more than two decades; apart from a $6.70 hike in July 2020 that followed a brief price war. For Arab Light, prices were lifted by $1.40 against the marker; compared with a median estimate for an 88 cent increase in a Bloomberg survey.
According to the traders, another reason for Aramco’s price hike is that lighter varieties from the US, Europe, and West Africa are still too pricey for Asian buyers. However, they said some medium-sour grades like Mars from the US could start finding their way to the region.