DUBAI Saudi Arabia has raised its official selling prices (OSPs) for all its crude oil grades sold to Asia in July, in line with market expectations, after OPEC and non-OPEC producers agreed to extend supply cuts last month.
State oil giant Saudi Aramco said on Sunday it raised the July price for its Arab Light grade for Asian customers by $0.60 a barrel versus June to a discount of $0.25 a barrel to the Oman/Dubai average.
The hike was bigger than anticipated by Asian refiners and traders surveyed by Reuters. Saudi Aramco was expected to increase the price of its flagship Arab Light crude by 20-50 cents a barrel in July, as the contango in Middle East crude benchmarks narrowed last month.
A contango market refers to prompt prices that are lower than those in future months, while narrowing contango signals increased demand or tightening supply.
Aramco also raised its Arab Light OSP to Northwest Europe by 35 cents a barrel for July from the previous month to a discount of $3.10 a barrel to the ICE Brent Settlement.
The Arab Light OSP to the United States was set at a premium of $1.10 a barrel to the Argus Sour Crude Index (ASCI) for July, up $0.50 a barrel from the previous month.
OPEC, Russia and other oil producers agreed on May 25 to extend cuts in oil output by nine months to March 2018 as they battle a global glut of crude after seeing prices halve and revenues drop sharply in the past three years.
Saudi crude OSPs set the trend for Iranian, Kuwaiti and Iraqi prices, affecting more than 12 million barrels per day (bpd) of crude bound for Asia.
(Reporting by Reem Shamseddine and Celine Aswad; Editing by Andrew Torchia and Rania El Gamal)