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Oil Gains Momentum On Strong U.S. Economic Data

Oil Gains Momentum On Strong U.S. Economic Data

Oil continued to gain momentum…

Saudis Could Hike Prices For Their Oil To Highest Spreads On Record

Saudi Arabia, the world’s largest oil exporter, could raise its official selling prices for Asia for April to the highest differentials to benchmarks on record, as buyers scramble to secure additional crude from the Middle East amid toxic Russian cargoes after Putin’s invasion of Ukraine.

The Saudis are expected to raise significantly their official selling prices (OSPs), and Arab Light—the Kingdom’s flagship grade—could see its price for Asia next month at as much as $4.50 per barrel over the Oman/Dubai average, which would be a record high differential, three of five refining sources in Asia said in a Reuters poll on Wednesday. The expected Arab Light price would be $1.70 per barrel more than the price at which the grade is selling to Asia in March.

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Saudi Arabia generally sets the pricing trends of the other major Middle Eastern oil producers, and it usually sets the OSPs of its crude for the following month around the fifth of each month, typically after the monthly OPEC+ meeting.

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This month’s meeting on March 2 didn’t result in any surprises and the OPEC+ group rubberstamped another modest 400,000 barrels per day (bpd) increase in its collective oil production for April, despite soaring oil prices after a key member of the pact, non-OPEC producer Russia, invaded Ukraine.

The expectation of a sharp increase in Saudi oil prices reflect the rallying Dubai/Oman prices, off which Middle East’s crude for Asia is priced, and the exceptionally tight market for Asian buyers, many of which are now seeking extra volumes from the Middle East – despite oil’s rally to over a decade-high – as they are wary of touching barrels from Russia. Crude from Russia, the key Saudi ally in the OPEC+ pact, has become increasingly toxic for buyers globally after Russia’s invasion of Ukraine was met with harsh banking sanctions for Russian banks.   

By Tsvetana Paraskova for Oilprice.com

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