Saudi crude oil prices for Asia could reach record highs in September

Major oil exporters in Saudi Arabia may raise crude oil prices for Asian customers for the third month in a row in September. Albeit refining margins are lower due to high oil prices and COVID-19 restrictions in China.

Saudi Aramco could raise the selling price (OSP) for its main customer, Arab Light crude, by 70 cents to $1 per barrel from the previous month.

The increase will take prices to a record high in September, up from $9.35 per barrel above the Oman/Dubai average in May.

In general, Saudi Arabia sets prices based on monthly changes in the market structure in Dubai. This reflects the price difference between the first and third months.

In July, tight supply pushes next-month prices about $1.70 per barrel above current-month trading prices.

Profit margins at Asian refineries processing Dubai crude have fallen as much as 97% this month, and gasoline prices fell into negative territory last week.

Formosa Petrochemical Corp, Asia’s largest fuel exporter, could cut the operating rate of its RFCC plant, currently running at full capacity, by 5% in the coming weeks.

However, the refiner said the gains should support a moderate rise in crude prices for now.

China is the world’s largest importer of oil. Partial shutdowns are currently underway again across the country, reducing fuel consumption, but the market expects demand to recover in the coming months. Beijing promises further stimulus measures to spur economic growth.

Saudi Aramco is expected to publish monthly prices after the Aug. 3 meeting of OPEC and its allies.

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