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Saudi Arabia boosts Jan. oil selling prices in Asia after OPEC+ deal - S&P Global

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Highlights

Aramco lowered pricing of all grades for US customers

Increases follow OPEC+ deal to gradually increase output

Differentials lowered for US, where COVID-19 cases still rising

Dubai — Saudi Aramco raised all pricing of its crude exports for January to Asia after OPEC and allies agreed to a gradual increase in production starting next month.

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Pricing was more mixed in other regions, with all differentials lowered for the US, and unchanged to lower for Northwest Europe and the Mediterranean.

The official selling price in Asia for Arab Light was increased by 80 cents/b to a premium of 30 cents/b against Oman/Dubai, Saudi Aramco said in a Dec. 6 pricing letter. Pricing for Extra Light was also increased 80 cents/b, while Super Light was increased 60 cents/b, Arab Medium was raised 55 cents/b and Arab Heavy was increased by 40 cents/b. Market participants told S&P Global Platts that Saudi Aramco was expected to raise the price of medium, sour Arab Light for January by 50-60 cents/b from December, because of strength in the benchmark cash Dubai market as well as firm spot differentials last month. Some expected smaller increases considering still lackluster refining margins and competition from arbitrage barrels.

OPEC and allies agreed to increase production quotas by 500,000 b/d in January, instead of the 1.9 million b/d increase that had been originally scheduled, and plan to adjust them monthly, so as not to overwhelm the market with new supplies in the midst of a recovery from the pandemic hit on demand. On Dec. 4, NYMEX January WTI settled 62 cents higher at $46.26/b and ICE February Brent was up 54 cents at $49.25/b.

In the US, where new cases of Covid-19 have surpassed 200,000 per day, the OSPs for all four grades – Extra Light, Light, Medium and Heavy – were decreased by 30 cents/b. Pricing is against the Argus Sour Crude Index.

For crude destined for Northwest Europe, the differentials for Extra Light and Light grades remained unchanged. Meanwhile, the Medium grade crude was lowered by 55 cents/b, and Heavy grade was cut by 90 cents/b. Pricing is against ICE Brent.

For the Mediterranean, Extra Light and Light grades were raised by 20 cents/b; the Medium grade was cut by 30 cents/b and Heavy grade was slashed by 90 cents/b. Pricing in the region is against ICE Brent.

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