Top oil exporter Saudi Arabia may raise the price for its flagship Arab Light crude to Asia for a fifth straight month in November, underpinned by its prolonged voluntary output cut and resilient oil demand in the region.
State oil giant Saudi Aramco (2222.SE) may hike the official selling price (OSP) for its medium sour crude by about 45 cents a barrel for November, according to five respondents surveyed by Reuters, which would bring the price to its highest this year.
Middle Eastern crude prices jumped in September as Saudi Arabia said it would extend its 1 million barrels-per-day (bpd) supply cut to the end of 2023, with Russia also rolling over its 300,000 bpd reduction for another three months.
Concerns over the supply tightness widened the forward backwardation last month, with the first- and third-month price spread for Middle East benchmark crude Dubai averaging around $2.59 a barrel, comparing to $2.03 a barrel in the prior month.
The two members of OPEC+, a grouping made up of the Organization of the Petroleum Exporting Countries (OPEC) and its producer allies, have said they would review their supply plans monthly. Ministers from OPEC+ will hold their next meeting on Wednesday.
"There is no sign that Saudi will revise its output cut decision at this moment. So we expect no change on their determination of defending oil prices," said one respondent.
Reuters reported over the weekend that OPEC+ is unlikely to tweak its current oil output policy at the upcoming ministerial panel.
OPEC's Secretary General, Haitham Al Ghais, said at an energy industry event on Monday the oil cartel is optimistic on oil demand this year, expecting year-on-year demand growth of more than 2.3 million bpd.
Meanwhile, a wider spread between Brent and Dubai is making arbitrage cargoes from the Atlantic Basin more expensive for Asian buyers, which could prompt refiners to place more orders to buy Middle Eastern oil.
The respondents also expect Saudi Aramco to increase prices for Arab Medium and Arab Heavy by about 30 to 40 cents from the previous month.
Saudi Aramco's OSPs are usually released around the fifth of each month, and set the trend for Iranian, Kuwaiti and Iraqi prices, affecting about 9 million bpd of crude bound for Asia.
Saudi Aramco officials as a matter of policy do not comment on the monthly OSPs.
Below are the expected Saudi Aramco official selling prices for November 2023 (in $/bbl against the Oman/Dubai average):
