Top oil exporter Saudi Arabia has cut the official selling price (OSP) of its flagship Arab Light crude to Asia by $1.30 in June, state-owned firm Saudi Aramco said on Saturday.
The June OSP for Arab Light crude has been set at the Oman/Dubai average plus $1.15 a barrel, down from $2.45 a barrel in May.
The cut was deeper than the 80 cents traders had expected, following a narrowing of Dubai crude’s backwardation, reflecting poorer demand for cargoes to be delivered immediately.
The Arab Light OSP to the United States has been raised by 30 cents, to the ASCI plus 50 cents a barrel, while prices of the same crude to Northwest Europe was raised by $1.25 to ICE Bwave minus $2.60 a barrel.
Concerns over supply shortages from Iran pushed Brent crude prices in March to $128 a barrel, the highest since 2008, as Western sanctions aimed at disrupting Tehran’s oil trade start to bite ahead of their enforcement on July 1.
Saudi Arabia could benefit from extra demand from customers who have had to turn away Iranian oil due to the sanctions, and put a floor under their prices.
Extra crude from Saudi Arabia has helped cover for tighter sanctions on Iran, whose own oil output has hit the lowest in two decades, and OPEC’s April output is its highest since 2008, according to a Reuters survey.
State oil giant Saudi Aramco sets its crude prices based on recommendations from customers and after calculating the change in the value of its oil over the past month, based on yields and product prices.