Saudis Raise Oil Pricing to Asia After Attacks Cut Output
Aramco sets November Arab Light premium at $3/bbl, up $0.70.
(Bloomberg) -- Saudi Arabia, the world’s biggest crude exporter, raised all pricing for November oil sales to Asia as refining margins rose and the country’s state oil producer pulled out the stops to maintain supply after aerial attacks briefly knocked out half its output last month.
State-oil producer Saudi Aramco increased its official selling price for Arab Light crude for November shipment to buyers in Asia by 70 cents a barrel to a premium of $3 above the Middle East benchmark. Five traders and refiners in a Bloomberg survey had expected pricing for the grade to rise by 55 cents a barrel to a premium of $2.85 a barrel.
Saudi Arabia experienced the worst-ever attack on its energy infrastructure when more than two dozen explosives-laden drones and missiles smashed into some of its biggest crude-processing facilities. The attacks at Abqaiq and Khurais in the kingdom’s east caused Aramco to halt 5.7 million barrels a day of Light crude production. The country has succeeded in raising output to 9.9 million barrels a day, Prince Abdulaziz bin Salman, Saudi energy minister, said at the Russia Energy Week conference in Moscow.
Key Insights
- Aramco raised pricing for Medium, Light and Extra Light crudes to Asia by 70 cents a barrel as profit from processing Middle East crude rose to the highest levels since May
- Light barrels were most affected by the attacks, cutting availability to refiners
- Aramco substituted with some Medium or Heavy grades to maintain supply
- Spread between Heavy crude and Light, Extra Light barrels widens to the most this year
- Refining margins rise on seasonal demand, lower run rates, and shifts in product demand spurred by IMO ship fuel rules taking effect in January
- After Sept. 14 attacks, Aramco cut refinery runs to make more crude available for export, and the company’s trading unit bought refined fuels
Know More
- Aramco sets monthly price premiums or discounts based partly on expected profits for refiners and the forward price curve
- Sales to the U.S. have declined as Aramco trims output to meet its OPEC quota
- Saudi state producer kept all pricing to the U.S. unchanged
- Aramco cut pricing for all grades to Northwest Europe and the Mediterranean region
- Click here for a table of global OSPs.
To contact the reporters on this story: Serene Cheong in Singapore at scheong20@bloomberg.net;Sharon Cho in Singapore at ccho28@bloomberg.net;Anthony DiPaola in Dubai at adipaola@bloomberg.net
To contact the editors responsible for this story: Nayla Razzouk at nrazzouk2@bloomberg.net, Bruce Stanley, John Deane
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