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Aramco Reduces Crude-Oil Prices for September Sales to Asia, Europe, U.S.
Saudi Aramco, the world’s largest state-owned oil company, lowered official selling prices on all crude grades for customers in Asia and Europe for September, and cut prices for light grades to the U.S.
The company reduced the formula price of its Arab Super Light to Asia the most among cargoes heading east, dropping it by 85 cents a barrel to 25 cents a barrel above the benchmark Dubai price assessment published by Platts.
For shipments to the U.S., Aramco cut the premium for Arab Extra Light crude to $1.15 a barrel above the Argus Sour Crude Index, 30 cents lower than August cargoes, the company said in an e-mailed statement today. Arab Light fell 5 cents, to a 45 cent discount to the benchmark. It raised prices for Arab Medium and Arab Heavy crude to the U.S., according to the price list.
Saudi Arabia was the fourth-biggest exporter of crude to the U.S. last year, dropping back from second place in 2008, according to data from the U.S. Energy Information Administration. Canada, Mexico and Venezuela all shipped more crude to the U.S., the data show.
The Dhahran-based company has supplied full volumes to refiners in Asia since December. It lowered prices on most crudes to Asia in February, March, April and July, after raising prices on light grades to the U.S. and Asia for May and June.
The discount for Arab Light crude to Asia was cut to 65 cents below the Dubai assesment, a price reduction of 50 cents, according to Aramco’s price list. The price cut for the grade, Aramco’s largest export type, met expectations, according to the median estimate in a Bloomberg News survey of six refiners in South Korea, Taiwan, India, and Singapore this week.
Extra Light
The premium for Arab Extra Light grade to Asia was reduced to 20 cents above the Dubai assesment, 60 cents lower than prices for August. The refiners, who asked not to be identified by name, citing their companies’ policies, had expected the grade to be lowered by 80 cents.
Refining profits from producing naphtha slumped in Asia last month to the lowest level since August. The price difference between fuel oil and gasoil has narrowed limiting the margins processors can make from converting residues into lighter oil-products. Aramco faces pressure on prices because later-dated supplies of Dubai are at a premium to prompt cargoes, a market situation called contango.
The largest Organization of Petroleum Exporting Countries member and the group’s de-facto leader, Saudi Arabia has led production cuts announced in 2008 to support prices. OPEC decided at a March meeting in Vienna to leave production quotas unchanged. Most members are exceeding their output quota to take advantage of prices that rallied 78 percent last year.
The Persian Gulf state pumped 8.3 million barrels a day in July, 10,000 more than in May and more than 200,000 barrels a day above its OPEC quota, according to Bloomberg estimates.
The following table gives the differentials of the four regions in relation to benchmark prices, the month-on-month change and the degrees of gravity as defined by the American Petroleum Institute. Prices are in U.S. dollars a barrel.
United States Variety API September August Change Extra Light 38.5 +1.15 +1.45 -0.30 Arab Light 32.5 -0.45 -0.40 -0.05 Arab Medium 31 -2.00 -2.10 +0.10 Arab Heavy 27 -3.35 -3.50 +0.15 ---------------------------------------------------- Prices for customers in the U.S. expressed as a differential against Argus Sour Crude Index published by Argus Media Ltd. Asia Variety API September August Change Super Light 50.6 +0.25 +1.10 -0.85 Extra Light 38.5 +0.20 +0.80 -0.60 Arab Light 32.5 -0.65 -0.15 -0.50 Arab Medium 31 -2.15 -1.75 -0.40 Arab Heavy 27 -3.40 -3.00 -0.40 ---------------------------------------------------- Prices for Asian customers expressed as a differential against the Dubai price assessment that includes oil from the Dubai, Oman and Upper Zakum fields published by Platts, the energy- information division of McGraw-Hill Cos. Northwestern Europe Variety API September August Change Extra Light 38.5 -1.70 -0.35 -1.35 Arab Light 32.5 -2.40 -1.40 -1.00 Arab Medium 31 -3.90 -3.05 -0.85 Arab Heavy 27 -4.60 -3.90 -0.70 --------------------------------------------------- Mediterranean Variety API September August Change Extra Light 38.5 -1.70 -0.60 -1.10 Arab Light 32.5 -2.95 -2.25 -0.70 Arab Medium 31 -4.65 -4.00 -0.65 Arab Heavy 27 -5.40 -4.90 -0.50 --------------------------------------------------- Prices for Northwest European and Mediterranean customers are expressed as a differential against the Brent weighted average posted by Intercontinental Exchange, free on board Ras Tanura.
To contact the reporters on this story: Anthony DiPaola in Dubai at adipaola@bloomberg.net.
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