Saudi Aramco cuts official August crude prices for Asia
Saudi Arabia's state-controlled Saudi Aramco has reduced the official formula prices of August-loading crude exports for buyers in its core Asia-Pacific market, while increasing prices for European customers.
For customers in Asia-Pacific, Aramco has cut the August formula prices of its Arab Light and Extra Light grades by 60¢/bl compared with July and reduced the prices of its other grades by 20-70¢/bl.
The price cuts for Asia-Pacific are within customers' expectations. Refiners in the region expected a narrower Dubai backwardation to prompt a reduction in Saudi formula prices. The month-on-month change in Dubai intermonth spreads is one factor that producers such as Aramco consider when setting the formula prices for their Asia-bound cargoes.
For customers in northwest Europe, Aramco has raised the official August prices of its Extra Light, Arab Light, Arab Medium and Arab Heavy grades by 90¢/bl. For Mediterranean-bound exports of the same grades, it increased prices by 90¢/bl on a fob Ras Tanura basis and by 80¢/bl a fob Sidi Kerir basis.
European refiners were anticipating an increase in Saudi formula prices on the back of firm values for rival crudes and tighter global supply. The North Sea's largest crude grade, Norway's medium sour Johan Sverdrup, averaged $1.60/bl above the North Sea Dated benchmark fob Mongstad in June, up from a $0.29/bl premium in May.
Values of heavier grades in Europe have recently begun to improve. The Argus Brent Sour Index, which prices northwest Europe's heavier and sourer crudes, has averaged a 35¢/bl premium to Dated so far this week. The index averaged 10¢/bl above Dated in June and 7¢/bl below the benchmark in May.
Aramco is expected to export less crude in the summer months when domestic demand peaks. Saudi Arabia announced in early June that it will extend a 1mn b/d "voluntary" additional crude output cut — first implemented in July 2023 — for three months until the end of September.
For customers in the US, Aramco has lifted the August formula prices of Extra Light and Arab Light by 10¢/bl compared with July. It has left formula prices of the other grades unchanged.
| Saudi Aramco official formula prices | $/bl | ||
| August | July | ± | |
| United States (vs ASCI) | |||
| Extra Light | 7.10 | 7.00 | 0.10 |
| Arab Light | 4.85 | 4.75 | 0.10 |
| Arab Medium | 5.45 | 5.45 | 0.00 |
| Arab Heavy | 5.10 | 5.10 | 0.00 |
| Northwest Europe (vs Ice Brent) | |||
| Extra Light | 5.60 | 4.70 | 0.90 |
| Arab Light | 4.00 | 3.10 | 0.90 |
| Arab Medium | 3.20 | 2.30 | 0.90 |
| Arab Heavy | 0.80 | -0.10 | 0.90 |
| Asia-Pacific (vs Oman/Dubai) | |||
| Super Light | 2.75 | 2.95 | -0.20 |
| Extra Light | 1.60 | 2.20 | -0.60 |
| Arab Light | 1.80 | 2.40 | -0.60 |
| Arab Medium | 1.25 | 1.95 | -0.70 |
| Arab Heavy | 0.50 | 1.20 | -0.70 |
| Mediterranean fob Ras Tanura (vs Ice Brent) | |||
| Extra Light | 5.60 | 4.70 | 0.90 |
| Arab Light | 3.90 | 3.00 | 0.90 |
| Arab Medium | 3.30 | 2.40 | 0.90 |
| Arab Heavy | 0.60 | -0.30 | 0.90 |
| Mediterranean fob Sidi Kerir (vs Ice Brent) | |||
| Extra Light | 5.65 | 4.85 | 0.80 |
| Arab Light | 3.95 | 3.15 | 0.80 |
| Arab Medium | 3.35 | 2.55 | 0.80 |
| Arab Heavy | 0.65 | -0.15 | 0.80 |
| Source: Saudi Aramco | |||
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