Saudi Arabia's state-controlled Saudi Aramco has raised the official formula prices of all its May-loading crude exports.
The formula price for Arab Light, Arab Medium and Arab Heavy cargoes heading to Saudi Arabia's core Asia-Pacific market next month have been increased by $4.40/bl each compared with April, broadly in line with market expectations. Aramco had been expected to lift the May price for Arab Light exports to Asia-Pacific by $4-5/bl, depending on the impact of pandemic-related lockdowns on Chinese demand.
Some market sources had expected prices for Arab Medium and Arab Heavy to be raised by the same amount as Arab Light, although others anticipated a slightly smaller increase on the back of lower demand from India, where refiners have been buying heavily discounted medium sour Russian Urals.
A sharp month-on-month rise in Saudi prices for Asian customers was widely anticipated given the potential for supply disruptions in Russia and the effect that might have on pushing up overall Asian demand for Mideast Gulf grades. The Saudi price hike also comes at a time of deteriorating arbitrage economics for eastbound cargoes from the Atlantic Basin. The front-month Brent-Dubai EFS — or Ice Brent's premium to Dubai swaps and a key barometer of eastbound arbitrage — averaged around $11.77/bl in March, compared with $6.37/bl in February.
For its northwest European customers, Aramco has raised its May formula prices by $1.40-3.80/bl, while May prices for Mediterranean-bound exports have been increased by $0.60-3/bl on fob Ras Tanura terms and by $0.30-2.70/bl on fob Sidi Kerir terms. Market participants had expected Aramco to lift its prices for customers in the two regions. Many European buyers remain wary of purchasing Urals, which is increasing demand for alternative sour crudes.
North Sea crudes appear to have benefited the most from this reluctance to buy Urals, with several grades hitting record-high premiums to the North Sea Dated benchmark. There are signs of a pick-up in Baltic Urals cargoes arriving into the Mediterranean though, which may impact demand for Mideast Gulf crudes.
Aramco has raised the May formula prices for all its US-bound crude shipments by $2.20/bl against April cargoes.
Saudi Arabia's crude output quota under the Opec+ deal is set to rise to 10.55mn b/d in May, from 10.44mn b/d in April.
| Saudi Aramco official crude formula prices | $/bl | ||
| Column header left | May | April | ± |
| US (vs ASCI) | |||
| Extra Light | 7.00 | 4.80 | 2.20 |
| Arab Light | 5.65 | 3.45 | 2.20 |
| Arab Medium | 4.95 | 2.75 | 2.20 |
| Arab Heavy | 4.50 | 2.30 | 2.20 |
| Northwest Europe (vs marker crude Ice Brent) | |||
| Extra Light | 8.10 | 4.30 | 3.80 |
| Arab Light | 4.60 | 1.60 | 3.00 |
| Arab Medium | 1.90 | 0.50 | 1.40 |
| Arab Heavy | 1.10 | -1.40 | 2.50 |
| Asia-Pacific (vs Oman/Dubai) | |||
| Super Light | 10.85 | 8.15 | 2.70 |
| Extra Light | 9.60 | 5.90 | 3.70 |
| Arab Light | 9.35 | 4.95 | 4.40 |
| Arab Medium | 9.30 | 4.90 | 4.40 |
| Arab Heavy | 7.95 | 3.55 | 4.40 |
| Mediterranean fob Ras Tanura (vs marker crude Ice Brent) | |||
| Extra Light | 5.60 | 4.00 | 1.60 |
| Arab Light | 4.90 | 1.90 | 3.00 |
| Arab Medium | 2.20 | 0.80 | 1.40 |
| Arab Heavy | 0.00 | -0.60 | 0.60 |
| Mediterranean fob Sidi Kerir (vs marker crude Ice Brent) | |||
| Extra Light | 5.75 | 4.45 | 1.30 |
| Arab Light | 5.05 | 2.35 | 2.70 |
| Arab Medium | 2.35 | 1.25 | 1.10 |
| Arab Heavy | 0.15 | -0.15 | 0.30 |
| Source: Aramco | |||
