"It makes it much more expensive for the US importers especially for heavier crudes from Saudi Arabia," John said. Prices of all grades into Northwest Europe as well as the US were raised by a uniform 90 cents/b from last month, while for Mediterranean markets, prices of all grades were raised by a uniform 60 cents/b.
OSPs for the US, which is a significant buyer of Saudi heavy crude grades, saw the biggest increase. "In order to maintain some market control and some market share, they are likely to maintain the supply of lighter crude, whereas the heavier crude, there might be more deeper cuts," Arun Leslie John, chief market analyst at Dubai-based Century Financial, said.Ī day after the surprise 1 million b/d cut was announced, state energy giant Saudi Aramco increased its official selling prices (OSPs) across the board. It is a medium sour grade, with a sulfur content of 1.96% and API gravity of 33.3, according to the Platts Periodic Table of Crude by S&P Global Commodity Insights.Īnalysts said the new cuts will first remove significant volumes of its heavy and medium sour crude grades from the market. Onshore fields are generally the source of Saudi Arabia's lighter crudes, while offshore production mainly yields the medium and heavy grades.Īrab Light is the largest stream, with average production in 2022 of 5.42 million b/d. In unveiling the cut at a press briefing after OPEC and its allies met in Vienna, Saudi energy minister Prince Abdulaziz bin Salman said he would leave refiners in "suspense" over how it would be apportioned among the country's crude grades, which range from Arabian Super Light to Arabian Heavy. The July cut will take Saudi Arabia's crude production to about 9 million b/d, its lowest since June 2021, and will come as domestic consumption is likely to peak due to power generation for air conditioning use in the summer. The OPEC+ kingpin on June 4 announced its latest surprise cut of 1 million b/d, to take effect in July, on top of existing 1.5 million b/d of output reductions it is already implementing.
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