![]() ![]() Formula prices of cargoes bound for Northwest Europe by selected grades (vs ICE Bwave). For reference, the same spread in Northwest Europe is $3.50 per barrel, more than double the Asian.Ĭhart 2. Consequently, Asia has the narrowest spread between Arab Heavy and Arab Extra Light, a mere $1.55 per barrel, which goes on to show just how tight medium sour supply is across the Asian continent. The heavier grades, Arab Light, Medium and Heavy were all lifted by a uniform $0.20 per barrel compared to July, whilst Arab Extra Light was rolled over and Arab Super Light (a grade that didn’t witness any exports in May and June) was cut by $0.40 per barrel, reflective of naphtha cracks going into a tailspin. Then came the announcement that Saudi Arabia would extend its production cuts into August, followed up within a couple of minutes by Russia’s pledge to curb exports in the same month by 500,000 b/d and hikes were back on the agenda. ![]() ![]() There was some upside in refining margins across the globe, mostly coming from stronger diesel cracks, however, major increases seemed very unlikely. ![]() With the Dubai cash-to-futures spread coming in flat compared to May, with the June average at $0.99 per barrel, the futures curve indicated that Asian prices should be rolled over into August. Timing is everything for Saudi Arabia, especially when it comes to setting prices. Saudi Aramco’s Official Selling Prices for Asian Cargoes (vs Oman/Dubai average). The market needed the Saudi extension as worrying signs of an impending decline in Chinese manufacturing as well as recessionary fears spreading across North America and Europe prompted many investors to quit their positions in the oil market and wait for all the woes to pass.Ĭhart 1. When Middle Eastern national oil companies set out to issue their formula prices for August 2023, Saudi Arabia’s extension of the production cuts into August and Russia’s pledge to cut exports by 500,000 b/d in the same month were making headlines across the OPEC+ universe. Saudi Arabia pledged to cut production right after the OPEC+ summit in early June, however, it took the market several weeks to see and properly assess the impact of such output curtailments. ![]()
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