|
Listen now
|
Saudi Arabia may raise the price of its crude oil for the third month in a row for September cargos, according to sources from the refining industry surveyed by Reuters.
Per those sources, Asian buyers of Saudi crude could see September prices for Arab Light rise by $0.45 per barrel from August’s level, reaching a $3.65 premium over the Dubai/Oman benchmarks—the highest since the start of the year.
“It’s always hard to make prediction on Saudi’s OSPs. But the rollover of the 1 million bpd cut is seen as a baseline in September price assessments,” one of the Reuters sources said.
The voluntary production cuts that Saudi Arabia began in July are already squeezing supply of oil from OPEC. Combined with production problems in Angola, Nigeria, and Libya, the cuts contributed to an 840,000-bpd decline in OPEC’s total for July, according to another Reuters survey.
As for going forward, opinions among analysts diverge. Some, like the unnamed source from the refining industry, believe Saudi Arabia will roll the cuts over from August. Others, such as a group surveyed by Bloomberg last month, believe the Saudis may start rolling these back.
“There’s ample evidence for Saudi Arabia to start unwinding the cuts in September. The market is screaming out for these barrels, and refiners are scrambling to get hold of them,” James Davis, director of short-term global oil services at FGE, told Bloomberg.
The respondents in the survey forecast Riyadh could reduce the cuts by between 250,000 and 500,000 barrels daily in September.
Arab Light, the flagship Saudi oil blend, has been trading in a backwardation recently, Reuters noted in its report, suggesting that demand was exceeding available supply, thanks to the voluntary cuts.
The supply of heavier grades has also been constrained leading analysts to expect price hikes in those, too. The only Saudi crude that may see no change in prices is Arab Extra Light due to ample supply.
Source: Oilprice