Asian Refiners Call on Saudi to Cut Oil Prices Further in May
04.06.2020 By Ricardo Perez - NEWS

April 6, 2020 [Reuters – Published on April 2, 2020] – Asian refiners have called on Saudi Arabia to slash the official selling prices (OSP) of its crude for a third straight month in May, after Middle East benchmarks and refining margins dropped amid ample supplies and lower demand due to the coronavirus.

 
Last month, the world’s top exporter Saudi Arabia surprised everyone by slashing prices for April, after OPEC’s supply-cut pact with Russia fell apart, sparking a battle for market share and sending oil prices to 18-year lows. [O/R]

Markets globally are now flooded with cheap oil with storage spaces filling up fast, while refiners cut output or shut plants following coronavirus lockdowns.

State giant Saudi Aramco was initially planning to announce the prices by Thursday, but this has been pushed back to April 5, two sources with knowledge of the matter said.

Saudi Aramco officials, as a matter of policy, do not comment on the kingdom’s monthly OSPs.

However, a senior Gulf source familiar with Saudi thinking told Reuters the Kingdom supports cooperation between producers to stabilize oil prices.

Earlier, U.S. President Donald Trump said he expected Saudi Arabia and Russia to reach a deal soon to end their price war, sending crude prices soaring 10%.

Prices on both sides of the Atlantic marked their worst ever month in March as the coronavirus pandemic crippled oil demand while the Saudi-Russia price war drove up supplies.

Oil prices for “all grades are plunging … It’s impossible for the Saudis not to cut prices, unless they no longer want a price war and are switching to reducing production,” said one of the respondents in a Reuters survey of six refining sources.

Saudi OSPs set the trend for Iranian, Kuwaiti and Iraqi prices, affecting more than 12 million barrels per day (bpd) of crude bound for Asia.

Saudi Aramco is expected to cut the May OSP for Arab Light crude by $1 to $6 a barrel, the survey showed, with the respondents on average expecting a $3.67 per barrel cut.

Some of the refining sources also pointed to the wide discounts for competing supplies such as Russia’s Urals crude and U.S. Mars crude as a reason for Saudi to cut prices.

The price cuts would also be necessary to offset surging freight costs that have eroded refiners’ margins, they said.

It’s tough for refineries to survive,” another respondent said.

Prices for lighter Saudi grades could fall more than the heavier ones due to weak naphtha and gasoline margins and an ample supply of light crude globally, the respondents said.

May-loading light sour grades from Abu Dhabi – Murban and Das – have traded at deep discounts to their OSPs in the spot market.

Saudi Aramco sets its crude prices based on recommendations from customers and after calculating the change in the value of its oil over the past month, based on yields and product prices.

————-

Click Here to Access Today a 4,900 Tank Terminal Database With a Pro Trial
Click on the button and register to get instant access to actionable tank storage industry data

UAE Invests Billions in AI to Diversify Economy Beyond Oil
11.13.2024 - NEWS
November 13, 2024 [Oil Price]- The United Arab Emirates’ state-owned energy giant Abu Dhabi Nat... Read More
Gulf Energy Transition: Assessing Saudi and Emirati Goals
11.13.2024 - NEWS
November 13, 2024 [The Washington Institute]- On October 29, during Saudi Arabia’s annual Futur... Read More
How will The Energy Sector Fare Under Donald Trump?
11.13.2024 - NEWS
November 13, 2024 [Investing Daily]- The energy sector experienced a notable boost following Dona... Read More
PNOC, Pertamina Partner on LNG Infrastructure, Supply Chain
11.13.2024 - NEWS
November 13, 2024 [Manila Bulletin]- State-run Philippine National Oil Company (PNOC) has signed ... Read More