KSA Expected To Hike Oil Price On Robust Demand

Saudi Arabia is expected to raise the official selling prices of all its crude grades sold in Asia next month on the back of solid demand and refining margins.

Saudi Arabia usually sets the official selling prices (OSPs) of its crude for the following month around the fifth of each month, typically after the monthly OPEC+ meeting, which is scheduled for 2 February. The Kingdom is expected to increase all its prices for Asia for March.

The expected price hike would follow a cut for the February prices announced in early January, when Saudi Arabia lowered its OSPs to the lowest premium to regional benchmarks in three months, amid the rapid spread of Omicron and higher OPEC+ supply.

Expectations for March, however, are for an increase in the Saudi OSPs, due to higher Middle East benchmarks off which the crude going to Asia is priced, resilient demand in the Omicron wave, and strengthened refining margins for jet fuel and gasoline.

Saudi Arabia’s flagship Arab Light crude grade for the Asian market in March could be lifted by around $0.60 per barrel from the February price, the sources added.

For February, the Saudis had reduced the price of Arab Light for Asia by $1.10 a barrel to $2.20 per barrel over the Oman/Dubai benchmark, off which Middle Eastern exports to Asia are being priced. The premium over Oman/Dubai is the lowest for the Arab Light grade in three months.

For March, Reuters’ refining sources expect the price of Arab Light to rise by between $0.45 and $0.80 per barrel from the February price to a premium of $2.65 to $3.00 a barrel over Oman/Dubai. Stronger jet fuel and gasoline margins suggest that the lighter grades could see higher price hikes than the heavier crude varieties.