Spot market strengthens, Saudi Arabia may significantly raise official crude oil prices for Asia in October

(1) A survey of sources from five refineries indicates that Saudi Arabia may raise the official selling price (OSP) of Arab Light crude oil bound for Asia in October to parity with the Oman/Dubai benchmark, or up to a premium of $4 per barrel over the benchmark. (2) This means the OSP for October will rise by $2–$6 per barrel compared to September, while Saudi Arabia’s September OSP was set at a discount, the lowest in six years. The expected price hike is mainly driven by a significant strengthening in the Middle Eastern spot crude oil market. (3) On August 21, the Dubai crude spot premium to swaps rose to $13.58 per barrel, the highest since the end of May; the average premium this month is about $9.71 per barrel, significantly higher than July’s $1.26 per barrel. Oman crude spot price differentials have seen a similar level of strengthening.