• 3 minutes e-car sales collapse
  • 6 minutes America Is Exceptional in Its Political Divide
  • 11 minutes Perovskites, a ‘dirt cheap’ alternative to silicon, just got a lot more efficient
  • 6 days The United States produced more crude oil than any nation, at any time.
  • 6 days How Far Have We Really Gotten With Alternative Energy
  • 7 hours e-truck insanity
  • 4 days Bad news for e-cars keeps coming
  • 6 days China deletes leaked stats showing plunging birth rate for 2023
  • 7 days The European Union is exceptional in its political divide. Examples are apparent in Hungary, Slovakia, Sweden, Netherlands, Belarus, Ireland, etc.
Oil Prices Set for Third Weekly Loss in a Row

Oil Prices Set for Third Weekly Loss in a Row

OPEC+'s potential supply increases have…

What Does OPEC’s Strategy Shift Mean for the Oil Market?

What Does OPEC’s Strategy Shift Mean for the Oil Market?

OPEC+ changes course, announcing plans…

Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

More Info

Premium Content

Sour Crude Oil Prices Skyrocket As Saudi Arabia Tightens Supply

  • Due to reduced supply from Saudi Arabia and other Middle Eastern producers, sour crude oil prices have seen a significant surge.
  • This reduced supply has led to buyers seeking alternative sources, further driving up the price of sour crude oils globally.
  • Examples of this increase include U.S. Mars sour crude, Canadian Western Canada Select (WCS), and Norwegian Johan Sverdrup crude, all experiencing elevated prices due to the supply cut.
Oil Jack

Saudi Arabia and its fellow OPEC+ producers may not have lifted the international crude oil futures with their production cuts, but the reduced supply from the world’s top crude exporter has sent the prices of sour crudes rallying in recent weeks.  

In early June, the OPEC+ producers decided to keep the current cuts until the end of 2024, while OPEC’s top producer, Saudi Arabia, said it would voluntarily reduce its production by 1 million bpd in July to around 9 million bpd. Last week, Saudi Arabia said it would extend its unilateral 1 million bpd production cut into August and raised the prices of some of its grades – all of which are sour – for loading for Asia in August. 

The cuts from Saudi Arabia and other Middle Eastern producers, which began in May, have already had an outsized impact on the medium-sour and heavy supply, and prices are rallying. In contrast, the availability of lighter crude, such as Brent and other grades underpinning the Brent benchmark, has been higher. In other words, the physical tightness in sour crude grades hasn’t been reflected in the international Brent Crude benchmark, which – despite all the cuts from OPEC+ and Saudi Arabia – has failed to move above $80 per barrel so far. 

With a lower supply of Saudi and other Middle Eastern sour crudes, buyers are looking for alternatives in other parts of the world, driving up sour crude prices. 

For example, U.S., Canadian, and North Sea sour grades have seen prices rallying. The U.S. Mars sour crude traded at the end of last week at a $2 per barrel premium to U.S. crude futures at the Cushing hub—the highest Mars premium in three years, per Reuters estimates. Mars is also trading at a premium to WTI Midland, a light sweet crude, in a rare pricing reversal.  

In Canada, the heavy Western Canada Select (WCS) from Alberta has narrowed the discount to the WTI benchmark to $10 per barrel, the narrowest discount since Alberta mandated production cuts in 2019.

In Norway, the medium sour Johan Sverdrup crude from the massive oilfield of the same name traded on Friday at a record-high premium over Dated Brent, at $3.50 per barrel. The Saudi price hike and the reduced supply of Saudi crudes have sent Johan Sverdrup prices rallying, traders told Bloomberg. Johan Sverdrup typically trades at a discount to Dated Brent due to the higher sulfur content of the Norwegian grade. Six months ago, Johan Sverdrup traded at a $6 per barrel discount to Dated Brent.

By Tsvetana Paraskova for Oilprice.com


More Top Reads From Oilprice.com:

Download The Free Oilprice App Today

Back to homepage

Leave a comment

Leave a comment

EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News