OPEC+ kingpin Saudi Arabia is expected to price its flagship crude to Asia at a record differential for September, even as traders see the scope for a weaker spot market the following month, highlighting a potential turning point for the market, APA reports citing Bloomberg.
The world’s top crude exporter is expected to price its Arab Light crude to Asia at a US$10.80-a-barrel premium to the region’s benchmark for September-loading cargoes, according to the median estimate in a Bloomberg survey of five refiners. At the same time, a slump in margins for Asian processors means that such a hike may dampen any requests for extra barrels, traders said.
Global crude prices are headed in July for their first back-to-back monthly loss since late 2020 as investors attempt to price in the risks of a US recession, tighter monetary policy, and China’s repeated efforts to tame Covid-19. Despite the drop, the oil market’s physical signals remain robust for now, with Saudi Aramco set to release its official selling prices for September next week.
Some Asian processors have started to mull a reduction in operating capacity from September after running at maximum rates in recent months following the Ukraine war, which upended trade flows and helped boost gasoline prices to a record. Any pullback would potentially soften crude oil demand in the coming months.
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