Saudi Aramco hikes Asia crude premiums amid sour crude crunch

Quantum Commodity Intelligence – Saudi Aramco has increased its Official Selling Price (OSP) for the flagship Arab Light crude loading in June for refiners in Asia, with the heavier barrels typically produced by the Kingdom commanding higher premiums.

For Aramco's key customer base in Asia, differentials for the flagship Arab Light grade were priced at Platts Dubai/DME Oman +$2.90/b, up from +$2/b in May.

This was the highest OSP in five months and largely in line with expectations, based on a firmer market structure and higher spot premiums last month for tradeable Middle East grades such as Oman, Al Shaheen and Upper Zakum.

The higher OSPs also came after OPEC+ maintained the Q1 round of voluntary cuts into the second quarter, while the global crunch on supplies of sour crude has also underpinned Middle East grades.

Arab Medium was increased by $1/b to +$2.35/b, while Arab Heavy was hiked $1.10/b to +$1.60/b. Arab Extra Light was up $0.70/b to +$2.80/b.

Physical

Differentials for spot Middle East medium sour barrels improved during April, including flagship grades Oman and Upper Zakum changing hands at +$2.30-$2.50/b over Dubai swaps. Market structure also improved with the key M1/M3 (Jun24/Aug24) holding above +$2/b for most of April.

The Quantum average price for Dubai was $89.17/b on June-loading barrels versus $84.15/b on May-loading crude, a gain of 6%, with the market underpinned by geopolitical tensions, OPEC+ cuts and steady demand growth last month.

In April, a record volume of 18 Murban cargoes were delivered via the Platts MOC window as physical settlement versus partials in Dubai. This came as the slump in Asian distillate cracks contributed to the broader crunch on sweet/sour crude spreads, with medium sour barrels commanding a premium to Brent.

For Northwest Europe, the Arab Light OSP was set +$2.10/b over ICE Brent futures, up from +$0.30/b while Medium was hiked from minus $0.40/b to +$1.10/b. Both grades were hiked to reflect the relative weakness in Brent compared to sour barrels.

Arab Light for April to the US Gulf was kept unchanged at +$4.75/b over ASCI (Argus Sour Crude Index), while Medium was at +$5.45/b and Heavy at +$5.10/b, respectively, both slightly lower on the month.