The Saudis are expected to raise significantly their official selling prices (OSPs), and Arab Light—the Kingdom’s flagship grade—could see its price for Asia next month at as much as $4.50 per barrel over the Oman/Dubai average, which would be a record high differential, three of five refining sources in Asia said in a Reuters poll on Wednesday. The expected Arab Light price would be $1.70 per barrel more than the price at which the grade is selling to Asia in March.
Saudi Arabia generally sets the pricing trends of the other major Middle Eastern oil producers, and it usually sets the OSPs of its crude for the following month around the fifth of each month, typically after the monthly OPEC+ meeting.
The expectation of a sharp increase in Saudi oil prices reflect the rallying Dubai/Oman prices, off which Middle East’s crude for Asia is priced, and the exceptionally tight market for Asian buyers, many of which are now seeking extra volumes from the Middle East – despite oil’s rally to over a decade-high – as they are wary of touching barrels from Russia. Crude from Russia, the key Saudi ally in the OPEC+ pact, has become increasingly toxic for buyers globally after Russia’s invasion of Ukraine was met with harsh banking sanctions for Russian banks.