Saudi Arabia May Boost Arab Light Oil to Highest Price Since August 2009

Saudi Arabian Oil Co., the world’s biggest crude exporter, may raise the official selling prices of all of its January-loading supplies to Asia as a surge in processing profits boosts demand for crude.

Arab Light, Saudi Arabia’s largest export type, may be increased by 78 cents from December, according to the median of six responses from officials in a Bloomberg News survey of regional refiners. That would put the price at a premium of $1.15 a barrel to the average of Persian Gulf benchmarks Oman and Dubai, the highest since August 2009. Arab Extra Light may be raised by 78 cents, said the officials, who asked to remain unidentified, citing company policy. That would set the level at a $1.25 premium to the benchmarks, the most since June.

A shortage of diesel in China pushed up premiums for cargoes traded in the spot market to three-year highs. The supply crunch also help raise processing profits for turning crude into gasoil to $14.32 a barrel on Nov. 15, the highest since January 2009, according to data from PVM Oil Associates.

“The middle of the barrel has remained supported by China’s buying spree of gasoil in response to diesel shortages,” Vienna-based consultants JBC Energy GmbH said in their weekly Asian report. “Considering current levels and market fundamentals, we may expect the high price environment to stay around a bit longer.”

Arab Heavy, the country’s densest grade, may climb by 58 cents from December, according to the survey. Arab Medium may also rise by 58 cents, the respondents said.

Fuel Oil Discount

Increases in Arab Heavy and Medium will be tempered by a widening in fuel oil’s discount to Dubai crude. That price pushed out to minus $7.82 a barrel on Nov. 9, the lowest since May 4. Both grades yield more fuel oil after basic processing.

Saudi Aramco’s Extra Light and Light crudes yield a greater volume of diesel after processing than the company’s other export grades.

Last month, Saudi Aramco raised the price of Arab Light and Extra Light grades for December loading for buyers in Asia.

Arab Light climbed 45 cents to a discount of 5 cents a barrel to the Oman and Dubai average. Extra Light increased 95 cents to a premium of $1.80 and Super Light, the grade with the largest naphtha yield, jumped $1.45 to a premium of $3.35.

Arab Medium rose 20 cents to a discount of $1.60 a barrel to the benchmark’s average. Arab Heavy climbed 10 cents to a discount of $3.10.

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

To contact the editor responsible for this story: Clyde Russell at crussell7@bloomberg.net

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