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Saudi Arabia Raises Prices of Crude Oil Sold to All Customers in October
Saudi Aramco, the world’s largest state-owned oil company, raised official selling prices for all crude grades for customers in Asia, the U.S., Northwest Europe and the Mediterranean Sea for October.
The formula price of Arab Super Light crude rose the most among grades to Asia, increasing by 75 cents a barrel to a premium of $1 above the benchmark Dubai price assessment published by Platts, a person familiar with the rates said.
Among U.S. shipments, Aramco increased Extra Light and Arab Heavy prices by 5 cents a barrel each to a premium of $1.20 a barrel above the Argus Sour Crude Index and to a discount of $3.30 a barrel below the benchmark for the denser grade. Light and Medium grades will cost 10 cents a barrel more for U.S. buyers in October.
Aramco has supplied full volumes to refiners in Asia since December. It lowered prices on most crude grades to Asia for February, March, April, July and September, after raising prices on light grades to the U.S. and Asia for May and June. Aramco cut prices for light grades to the U.S. for September.
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.
‘Close to Perfect’
Crude for October delivery slipped 9.4 percent on the New York Mercantile Exchange in August to close the month at $71.92 a barrel. Saudi Arabia’s Oil Minister Ali al-Naimi said on March 30 oil prices between $70 to $80 a barrel were “as close to perfect as possible” and he hoped they remain in that range.
Overall, Aramco’s price increases on shipments to the Mediterranean were the largest, with the formula increasing by more than $1.20 a barrel for all four grades. Arab Medium will cost $1.65 a barrel more in October than in September, at a discount of $3 a barrel below the Brent benchmark.
The October discount for Extra Light crude to Northwestern Europe narrowed to 50 cents a barrel below Brent from a discount of $1.70 a barrel, a change or $1.20 a barrel from September.
Production Cuts
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. The group will next meet in October to review production and demand forecasts. Most members are exceeding their output quota to take advantage of prices that rallied 78 percent last year.
The Persian Gulf state pumped 8.29 million barrels of oil a day in August, 10,000 less than in July and 240,000 barrels a day above its OPEC quota, according to Bloomberg estimates.
Oil exports to Asia increased as China bought on average more than 1 million barrels of Saudi crude a day last year, Aramco said in its annual review released last month.
Crude exports to the U.S. slipped to 14 percent of Aramco’s total last year from 20 percent in 2008. Shipments to Asia represented 56 percent of the total in 2009, compared with a 52.7 percent share in 2008. Exports to Europe slipped to 4.4 percent last year from 5.2 percent in 2008.
For U.S. shipments, October marks the tenth month Aramco is pricing crude against the ASCI marker, an index of high-sulfur oil produced in the Gulf of Mexico. The benchmark replaced a West Texas Intermediate crude price published by Platts, the energy-information division of McGraw Hill Cos. WTI oil, a lighter, more expensive crude grade, also trades as a futures contract on the New York Mercantile Exchange.
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.
*T United States
Variety API October September Change Extra Light 38.5 +1.20 +1.15 +0.05 Arab Light 32.5 -0.35 -0.45 +0.10 Arab Medium 31 -1.90 -2.00 +0.10 Arab Heavy 27 -3.30 -3.35 +0.05 ----------------------------------------------------
Prices for customers in the U.S. expressed as a differential against Argus Sour Crude Index published by Argus Media Ltd.
Asia
Variety API October September Change Super Light 50.6 +1.00 +0.25 +0.75 Extra Light 38.5 +0.30 +0.20 +0.10 Arab Light 32.5 -0.50 -0.65 +0.15 Arab Medium 31 -2.05 -2.15 +0.10 Arab Heavy 27 -3.35 -3.40 +0.05 ----------------------------------------------------
Prices for Asian customers expressed as a differential against the Dubai price assessment used as a benchmark by oil traders and that includes oil from Dubai, Oman and Upper Zakum fields. The assessment is published by Platts, the energy-information division of McGraw-Hill Cos.
Northwestern Europe
Variety API October September Change Extra Light 38.5 -0.50 -1.70 +1.20 Arab Light 32.5 -1.65 -2.40 +0.75 Arab Medium 31 -3.15 -3.90 +0.75 Arab Heavy 27 -4.15 -4.60 +0.45 ---------------------------------------------------
Mediterranean
Variety API October September Change Extra Light 38.5 -0.40 -1.70 +1.30 Arab Light 32.5 -1.50 -2.95 +1.45 Arab Medium 31 -3.00 -4.65 +1.65 Arab Heavy 27 -4.20 -5.40 +1.20 ---------------------------------------------------
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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