Saudi Arabia is expected to increase its crude oil prices for Asia in August, reaching the highest level in four months. This follows a recent surge in spot prices, fueled by the Iran-Israel conflict and strong summer demand for fuel.
Industry sources predict the official selling price (OSP) for Arab Light crude may climb by 50-80 cents per barrel, placing it between $1.70 and $2 above the Oman/Dubai benchmark. Similar price increases are anticipated for other Saudi grades, including Arab Extra Light, Medium, and Heavy.
The recent conflict between Iran and Israel raised concerns about disruptions in oil supply, particularly through the Strait of Hormuz. Although prices spiked to a five-month high during the crisis, they eased after a ceasefire was reached.
Market volatility has been notable, with Middle East oil benchmarks like cash Dubai showing significant swings. The premium for cash Dubai reached a near four-month high in June before settling lower at the month’s end.
Refiners in Asia have already sought additional crude supplies from the Middle East to meet increased fuel demand. However, rising output from OPEC and its allies could limit further price gains. The group is expected to announce a substantial production increase for August, aiming to reclaim market share.
Saudi Aramco typically sets its monthly OSPs based on customer feedback and changes in oil values. These prices often influence oil pricing from other regional producers, impacting a significant portion of Asia’s crude imports.