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Saudi Arabia Likely to Lower July Oil Price to Asia on Slower Demand, Reuters Survey Shows

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Saudi Arabia could cut official selling prices, or OSPs, for crude oil shipments to Asia in July, which would mark a second month of cuts, according to a survey by Reuters.

This is due to slower demand despite loss of significant supply due to the closure of the Strait of Hormuz after the start of the Iran war.

The premium for the July OSP could slip to between $7.50 and $12.50 a barrel over average Dubai and Oman price quotes, according to five survey participants. That would be $3 to $8 lower than the OSP for June.

This would follow a drop in prices and a relatively quiet spot market throughout May when the cash Dubai price premium over swaps has averaged $8.90 versus $13.92 in April, according to Reuters data. Spot Oman premiums showed similar trends.

The Dubai premium rose to a record in March above $60 per barrel but the hike prompted Chinese refiners to slow activity as more expensive feedstock imports thinned margin or caused losses.

Brent and Murban crude futures were volatile this week amid the roller coaster of hope and despondency over prospects for a peace deal, with the publication of details of a draft framework in the midst of a limited missile strikes traded between the sides.

Saudi crude OSPs are usually published around the fifth of each month by state-owned Saudi Aramco which sets them, the article said.

Aramco does not comment on OSPs.

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