SINGAPORE, Nov 1 - Saudi Arabia, the leading oil exporter, is anticipated to reduce prices for most crude grades sold to Asia in December, reflecting a decline in the Middle East benchmark Dubai, according to trade sources.
Price reductions for Saudi oil would indicate weak demand and could influence the Organization of the Petroleum Exporting Countries (OPEC+) to consider postponing plans to increase production starting in December.
The official selling price (OSP) for the flagship Arab Light crude may decrease by 30 to 50 cents a barrel in December compared to the previous month, based on a Reuters survey of six refining sources. This aligns with a similar drop in Dubai price spreads experienced last month.
Despite a rebound in refining margins, spot premiums for Middle East crude fell last month, as the Asian market remained well supplied and demand from major buyers like China was lackluster.
Some sources predict smaller price cuts for heavier grades of Saudi crude, such as Arab Medium and Arab Heavy, due to strong margins for high-sulphur fuel oil.
Refining margins in Singapore, a key indicator for the region, rebounded to above $4 a barrel in the latter half of October, rising from an average of $2.12 in September, the lowest this year.
OPEC+ may delay the planned production increase for December by a month or longer, citing concerns over soft oil demand and rising supply, according to four sources familiar with the matter. A decision regarding this delay could be made as early as next week.
Saudi Aramco typically announces its crude prices around the fifth of each month, which set the pricing trend for Iranian, Kuwaiti, and Iraqi crude, impacting approximately 9 million barrels per day (bpd) of crude destined for Asia.
Saudi Aramco establishes its crude prices based on customer recommendations and the previous month's oil value changes, influenced by yields and product prices. Officials from Saudi Aramco generally refrain from commenting on the kingdom's monthly OSPs.