Industry sources told Reuters that Saudi Arabia is expected to cut crude oil prices for “most crude grades” sold to Asia in October as a result of a slump in Dubai in August. A Reuters survey revealed that the October official selling price (OSP) for flagship Arab Light crude is expected to decrease between 50 and 70 cents a barrel.
The price reduction in the Kingdom will mirror the low profitability of refineries in China, where demand is trapped in a downward spiral due to slow economic growth. Sources went as far as to speculate that September is unlikely to reel in high sales, breaking a cyclical convention for oil trade globally.
Members of OPEC+ intend to raise global output by 180,000 bpd in October as part of a larger initiative to unwind the latest round of 2.2 million bpd production cuts while keeping other cuts in place until the end of 2025. Two sources told Reuters that the Kingdom will maintain prices for Arab Light. This decision follows Saudi Arabia’s Arab Light price hike in Asia in September, compared to price cuts in the months prior. The September price hike was reserved for Asia, while other regions enjoyed price cuts.
Other variants, such as Arab Medium and Arab Heavy, could see price dips of less than $0.50 a barrel in October as a result of stable fuel oil demand worldwide. Saudi Arabia historically publishes its crude grades for the month in the first week of each month. These numbers serve as the benchmark for other suppliers in the Middle East. Alternatively, state-owned Aramco calculates its oil prices using a combination of customer recommendations and the change in the cost of its oil over the past month based on production figures and the prices of petroleum products.
