Florence Tan

SINGAPORE, (Reuters) – Saudi Arabia, a top oil exporter, may increase crude oil prices to Asia in December. This is due to a rebounding in spot premiums and distillate margins, sources in trade said Friday.

The state-owned oil giant, state of Texas, has reduced prices for the second consecutive month. Saudi Aramco According to six respondents in a Reuters poll, the Official Selling Price (OSP), for flagship Arab Light crude may rise by 30cs to 90cs in December.

This price increase is due to refiners increasing their output in order to satisfy higher demand. Countries are easing COVID-19 movement restriction restrictions, while oil consumption in the power sector is rising in light of a worldwide crunch in coal.

The survey’s wide-ranging values indicate that there is uncertainty about how Saudi Aramco will mark its prices, based on the pricing formula. This was because the producer had cut prices in recent months more than anticipated to attract buyers.

One respondent stated that they can “afford to go back towards OSPs model-driven.”

Their OSPs used to be way too high. The great reset has brought Saudi (crude), value closer to spot (levels).

The price spread in Dubai’s Middle East benchmark is a guide to how Saudi Arabia will raise or reduce Arab Light’s OSP. It typically shows the monthly changes in the first and third-month prices. In backwardation, this spread was averaging 86 cents per barrel. If prices in backwardation are high, they will be higher than the ones for future months. This indicates that there is a tight supply.

Other grades: Four of the respondents expected Arab Heavy’s OSP would stay flat or grow, following strong spot prices for comparable quality Iraqi crude. However, two other respondents suggested that price drops could be possible due to a decrease in fuel oil margins.

Another respondent stated that Arab Medium may see an increase in OSP after Banoco Arab Medium crude oil’s spot differential was converted to a premium.

Saudi crude OSPs set the standard for Iranian, Kuwaiti, Iraqi oil prices. They affected about 9,000,000 barrels per daily (bpd), of crude headed for Asia.

Saudi Aramco may release its monthly price after the meeting of the Organization of the Petroleum Exporting Countries with their allies.

Saudi Aramco officials do not make comments on OSPs for the Kingdom as it is a matter policy.

Here are the expected Saudi prices in December, (in USD/bbl compared to Oman/Dubai’s average).

Arab Extra Light +1.80 (+0.25/+1.15+2.05/+2.95

Arab Light +1.30 +1.90 +1.60 +1.20

Arab Medium: +1.05/+10.80 +0.95/+1.85

Arab Heavy -0.10, -1.00/+0.70, -1.10/+0.60

Source: Reuters. Trade