Saudi Arabia’s dilemma is shown quite neatly by its decision to raise crude oil prices for Asian refiners even though the kingdom is steadily surrendering market share in China, its biggest customer.

Saudi Aramco, the state-owned oil company, lifted the official selling price (OSP) for its benchmark Arab Light grade to Asian refiners by 60 cents a barrel for July shipments, according to a statement released on Sunday.

Arab Light cargoes for July will now be sold at a discount of 25 cents a barrel to the Oman-Dubai crude price, up from a discount of 85 cents for June shipments.

The increase in the OSP had been expected by the market, although it was by a wider margin than forecast in a survey of six Asian refiners and traders, with the increase of 60 cents beating even the top estimate of 50 cents in the poll.

Saudi Aramco sets the OSP 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.

It also takes into account the market structure, and some narrowing of the Oman-Dubai contango at times in May from April was also a pointer to an increase in the price.

Source: National News Agency

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