Tokyo, Singapore: Saudi Arabia has raised the official selling prices (OSPs) of its heavier crudes in September by more than expected for Asian buyers, setting Arab Heavy at its highest in two years, traders said yesterday.
The world's top oil exporter also raised prices to Europe but cut the OSPs sharply for all its crude supplies to the US.
For Asian customers, Arab Heavy, the kingdom's heaviest grade, was set at a discount of $3.60 a barrel to the Oman/Dubai average, up 70 per cent from August and at the strongest level since July 2005, exceeding the top end of forecasts in a Reuters survey last week.
"Refiners in Asia are all after medium and heavy crudes. It's very economical for them now," a seller said, referring to the relatively cheaper heavy crude grades compared with lighter Brent-linked crudes.
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The front-month Brent/ Dubai Exchange of Futures for Swaps (EFS) stood at $5.35/$5.40 a barrel yesterday morning against around $3.60 a month ago, making it more expensive for refiners to buy Brent-related crude from Europe.
Heavier grades also drew support from a strong fuel oil crack last month. The front-month fuel oil crack rose to an average of $10.96 a barrel below Dubai swaps in July, against a $11.44 discount in June, and has extended those gains to near minus $8, Reuters data show.
Arab Medium and Arab Light grades for Asia were raised by 50 cents and 20 cents a barrel from August, respectively, also above market forecasts.
The differential for Arab Extra Light for Asia was unchanged, in line with forecasts, while the Super Light crude OSP was cut by $1 a barrel amid weakening naphtha prices.
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