July 3 (Bloomberg) -- Saudi Arabia may lower the official price of its heavy oil grade sold to Asia from a six-year high as processing profit for fuel used by ships and power plants declined in the previous month, refinery officials said.

Saudi Arabian Oil Co., the world’s largest producer, may cut Arab Heavy by an average of about 70 cents a barrel for August, according to a survey of refiners in Taiwan, Singapore, Japan and India. Aramco may provide prices next week. Prices for Arab Light and Extra Light grades may decline, said the traders, who asked not to be unidentified, citing confidentiality agreements.

Saudi Arabian Oil, or Saudi Aramco, raised the July Arab Heavy level to a discount of 15 cents to the average of price of Persian Gulf benchmarks Oman and Dubai. That was the highest since August 2003 when Bloomberg first began compiling data on the grades.

“Aramco wants to increase the price of the heavy grades,” said Akira Kamiyama, a Tokyo-based energy trader at Mitsui & Co. “But if they increase beyond market expectations then the demand disappears, so Aramco is concerned about that.”

The increase corresponded with a narrowing in the profit margin for refiners. Arab Heavy yields a large amount of fuel oil after processing. The product’s discount to Dubai crude averaged $6.42 a barrel over June versus an average of $4.85 a barrel in May, according to data from PVM Oil Associates.

Light Grades

SK Energy Corp., South Korea’s largest processor, and Hyundai Oilbank Ltd. plan to reduce their output in the third quarter. Showa Shell Sekiyu K.K., the Japanese unit of Royal Dutch Shell Plc, said on July 1 it will refine 20 percent less oil this month, following similar announcements by Nippon Oil Corp., Idemitsu Kosan Co., Cosmo Oil Co. and Japan Energy Corp.

Saudi Aramco may lower its lighter-type grades by about 40 cents a barrel. Last month the company raised the official price for Arab Light by 40 cents to a premium of $1.40 a barrel to the Oman and Dubai average. That was the highest since July 2008.

Abu Dhabi National Oil Co., the state-owned producer for OPEC’s third-largest oil producer, told Asian refiners yesterday that its lowering the price of its Murban crude sold in June by 6 cents to a premium of $2.24 a barrel to Dubai from $2.30 a barrel. The grade yields a large amount of diesel and kerosene after processing and is considered a so-called light type.

Prices for lighter grades may decline as refiners’ profit from processing crude into middle distillates such as gasoil and kerosene has increased. The price difference between gasoil, or diesel fuel, and Dubai was at $7.23 a barrel today, down from $9.25 a barrel a month ago.

To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net

Last Updated: July 3, 2009 05:03 EDT