Saudi Arabia lowers selling prices for Asia only slightly - Commerzbank

Saudi Arabia lowered the official selling prices (OSPs) for Oil deliveries to Asia in July only slightly, Commerzbank's commodity analyst Carsten Fritsch notes.

Small price cut is a positive sign for Oil demand

"Buyers in Asia have to pay a price premium of $1.2 per barrel for Arab Light compared to the Oman/Dubai benchmark. This is 20 US cents less than in June. Market participants surveyed by Reuters had expected a price reduction twice as large. The small price cut is a positive sign for Oil demand, especially as Saudi Arabia is likely to significantly increase Oil deliveries in July due to the decision to expand Oil production."

"For this reason alone, a larger price reduction would not have come as a surprise. The OSPs for customers in the US were increased marginally. A price premium of $3.5 is payable for Arab Light compared to ASCI, a basket of sour Oil types. Remarkably, buyers in Europe will have to pay significantly more for Arab Light in July."

"The corresponding OSP over Brent was increased by $1.8 to $3.25 per barrel for north-west Europe and $3.05 for the Mediterranean region. It appears that Saudi Arabia is focussing entirely on defending its market share in Asia, leaving Europe to other suppliers."