Saudi Arabia may raise April crude prices to Asia for the
first time in five months due to higher demand from India, in an
effort to replace Russian supplies and soothe supply disruption fears as the threat of a
U.S.-Iran military conflict grows, refining sources said.
The April official selling price (OSP) for Arab Light crude
may rise by about $1 a barrel, returning to levels last seen in
December, four sources said in a Reuters survey, tracking a
similar rise in the spot Dubai premium this month. April OSPs
for other Saudi grades are also expected to move up in tandem,
they added.
“The spot market has seen a big upside in February, led by
increased buying from India seeking to replace Russian crude,”
said June Goh, a senior analyst at Sparta Commodities.
Dubai’s average premium jumped $1.18 a barrel so far this
month from January, Reuters calculations showed, after
TotalEnergies and Mercuria snapped up 34 cargoes on the Platts
window.
To cushion the impact from a possible strike, Saudi Arabia
is increasing its oil production and exports as part of a
contingency plan, two sources familiar with the plan told
Reuters.
Also, the Organization of the Petroleum Exporting Countries
and its allies, known as OPEC+, is likely to consider raising
its oil output by 137,000 barrels per day (bpd) for April at its
March 1 meeting, sources said, after suspending production hikes
in the first quarter.
Saudi crude OSPs are usually released around the fifth of
each month and they set the trend for Iranian, Kuwaiti and Iraqi
prices, affecting about 9 million bpd of crude bound for Asia.
State oil giant Saudi Aramco sets its crude prices based on
recommendations from customers 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.