The February official selling price (OSP) for flagship Arab Light may rise by 20 to 50 cents a barrel after falling to a four-year low in the previous month, a Reuters survey of six sources at Asian refineries said.

The OSPs for other grades – Arab Extra Light, Arab Medium and Arab Heavy – are expected to increase at least 30 cents, they added. These price adjustments are in line with the change in the market structure for the first and third month Dubai prices, the sources said. The spread widened by 42 cents a barrel in backwardation in December from the previous month, Reuters data showed.

Last month, spot premiums for February-loading Middle East grades recovered after hitting their lowest in a year in the previous month, driven by uncertainty over Iranian and Russian supplies. Some independent refiners in China switched back to Middle Eastern oil as fresh Western sanctions and robust Chinese demand drove prices of Iranian and Russian oil to multi-year highs.

Meanwhile, Indian state refiners are considering tapping the Middle East crude market as supply from their top supplier Russia has fallen. Saudi crude OSPs are usually released around the fifth of each month, and set the trend for Iranian, Kuwaiti and Iraqi prices, affecting about 9 million barrels per day (bpd) of crude bound for Asia.
State oil giant Saudi Aramco sets its crude prices based on recommendations from customers and after calculating the change in the value of its oil over the past month, based on yields and product prices. Saudi Aramco officials as a matter of policy do not comment on the kingdom’s monthly OSPs.

Source: Reuters reported by Siyi Liu and Florence Tan in Singapore, edited by Mark Potter