Saudi Crude Prices For October Reduced To US, Heavy Grades Raised For Asia And Europe
Saudi Aramco on 3 September announced its crude oil pricing formulas for October. The new adjustment factors show a reduction in the cost of all crudes going to the US and for light crudes to Asia, but an increase in the price of heavy crudes for Northwest Europe and the Mediterranean. The October prices reflect the recent performance of competing crudes on the three regional spot markets, where prices have been undermined by a lingering global economic slowdown, which has reduced the demand for crude among most consumers.
To The US
For October deliveries to the US, where Saudi Aramco uses WTI as its pricing reference, Saudi Aramco cut prices across the board: Arab Extra Light by $1.75/B, Arab Light by $1.40/B, Arab Medium by $1.20/B, and Arab Heavy by $0.70/B. The reductions were a result of the weakening of spot prices for sour crudes on the Gulf Coast market: Mars crude eased from WTI minus $4.70/B in early August to WTI minus $5.35/B in early September, while Poseidon fell from WTI minus $4.80/B in early August to minus $5.20/B in early September.
To Northwest Europe And The Mediterranean
For September deliveries to Northwest Europe and the Mediterranean, where Saudi Aramco uses the IPE’s Brent Weighted Average (BWAVE) quoted value as its pricing reference, prices were increased except for Arab Extra Light. For Northwest Europe, Arab Extra Light was reduced by $0.30/B, while Arab Light was raised by $0.10/B, Arab Medium was increased by $0.40/B and Arab Heavy was raised by $0.75/B. For the Mediterranean Arab Extra Light was marked down by $0.20/B, while Arab Light was raised by $1.00/B, Arab Medium by $1.20/B and Arab Heavy by $1.50/B. The increase in prices for heavier crudes was attributable to the strengthening of Urals spot prices after Russia raised export taxes, and Azeri Light crude supply was temporarily halted in the wake of a fire on the BTC pipeline in Turkey in early August and subsequent fighting in Georgia, through which the BTC passes.
To Asia
For September deliveries to Asia, where Saudi Aramco uses the Oman/Dubai price average as its reference, the prices for Arab Medium and Arab Heavy for October were increased by $0.70/B and $1.50/B respectively. Arab Super Light for October was marked down by $1.70/B, Arab Extra Light went down by $1.50/B and Arab Light by $0.70/B. Spot prices for lighter crudes declined in Asia during August as weak gasoil margins and reduced refinery runs curbed demand. However, fuel oil cracks were at their highest level all year, as reduced deliveries of heavy crude from Iran and lower arbitrage shipments from Europe kept supplies tight.
The formulas for October 2008 and the previous 12 months for deliveries to the US, Europe and the Far East – on an FOB Saudi Arabia basis, 50 days after B/L for the US, 40 days after B/L for NW Europe, and B/L date to the Far East – are as follows ($/B):
US (Price Reference WTI) | ||||||||||||||||||
2008 | 2007 | |||||||||||||||||
Oct | Sep | Aug | Jul | Jun | May | Apr | Mar | Feb | Jan | Dec | Nov | Oct | ||||||
Arab Light (32-36°) | -5.05 | -3.65 | -3.00 | -2.45 | -5.65 | -4.65 | -3.75 | -5.40 | -4.15 | -6.85 | -11.15 | -6.90 | -5.10 | |||||
Arab Medium (29-32°) | -7.90 | -6.70 | -7.40 | -8.30 | -10.45 | -9.25 | -7.65 | -8.35 | -7.45 | -10.05 | -13.75 | -9.50 | -7.65 | |||||
Arab Heavy (<29°) | -10.15 | -9.45 | -11.10 | -13.30 | -14.90 | -13.70 | -11.60 | -11.35 | -10.75 | -13.25 | -16.35 | -12.10 | -10.00 | |||||
Arab Extra Light (36-40°) | -3.10 | -1.35 | +0.10 | +2.40 | -1.45 | -0.55 | -0.30 | -2.60 | -1.10 | -3.90 | -8.60 | -4.35 | -2.65 | |||||
North West Europe (Price Reference Brent Weighted Average) | ||||||||||||||||||
Oct | Sep | Aug | Jul | Jun | May | Apr | Mar | Feb | Jan | Dec | Nov | Oct | ||||||
Arab Light (32-36°) | -4.55 | -4.65 | -5.25 | -5.75 | -4.85 | -3.95 | -3.25 | -1.75 | -3.15 | -2.90 | -2.10 | -3.35 | -2.45 | |||||
Arab Medium (29-32°) | -7.20 | -7.60 | -9.00 | -10.00 | -8.50 | -6.95 | -6.20 | -4.20 | -5.70 | -5.65 | -4.10 | -5.30 | -4.10 | |||||
Arab Heavy (<29°) | -9.00 | -9.75 | -11.55 | -13.05 | -11.15 | -9.30 | -8.45 | -6.35 | -7.90 | -7.85 | -5.55 | -6.75 | -5.55 | |||||
Arab Extra Light (36-40°) | -1.75 | -1.45 | -1.25 | -0.50 | 0.00 | +0.40 | +1.00 | +2.00 | +1.20 | +1.55 | +1.55 | +0.35 | +1.10 | |||||
Mediterranean (Price Reference Brent Weighted Average) | ||||||||||||||||||
Oct | Sep | Aug | Jul | Jun | May | Apr | Mar | Feb | Jan | Dec | Nov | |||||||
Arab Light (32-36°) | -3.50 | -4.50 | -6.40 | -5.40 | -4.95 | -3.95 | -3.85 | -2.35 | -2.55 | -1.90 | -2.20 | -3.10 | ||||||
Arab Medium (29-32°) | -6.00 | -7.20 | -9.40 | -9.05 | -8.05 | -6.65 | -6.55 | -4.80 | -5.00 | -4.50 | -4.05 | -4.95 | ||||||
Arab Heavy (<29°) | -8.00 | -9.50 | -11.90 | -12.10 | -10.80 | -9.05 | -9.05 | -7.25 | -7.55 | -6.95 | -5.75 | -6.65 | ||||||
Arab Extra Light (36-40°) | -0.75 | -0.55 | -1.35 | -0.05 | +0.05 | +0.45 | +0.85 | +1.65 | +1.65 | +2.35 | +1.25 | +0.45 | ||||||
Far East (Price Reference Oman/Dubai) | |||||||||||||
2008 | 2007 | ||||||||||||
Oct | Sep | Aug | Jul | Jun | May | Apr | Mar | Feb | Jan | Dec | Nov | Oct | |
Arab Light (32-36°) | 0.00 | +0.70 | +1.35 | +2.05 | +1.85 | +1.45 | +1.05 | +1.25 | +1.55 | +1.75 | +1.35 | +2.35 | +1.35 |
Arab Medium (29-32°) | -2.25 | -2.95 | -3.70 | -3.70 | -3.35 | -3.15 | -2.75 | -1.75 | -1.75 | -1.85 | -1.35 | -0.50 | -1.05 |
Arab Heavy (<29°) | -4.60 | -6.10 | -7.60 | -7.95 | -7.45 | -7.00 | -6.10 | -4.60 | -4.80 | -5.10 | -3.80 | -3.10 | -3.35 |
Arab Extra Light (36-40°) | +2.30 | +3.80 | +5.15 | +6.10 | +5.85 | +5.25 | +4.45 | +4.35 | +4.95 | +5.35 | +4.25 | +5.45 | +4.25 |
Arab Super Light (>40°) | +2.55 | +4.25 | +6.00 | +7.80 | +7.80 | +7.05 | +6.35 | +6.05 | +6.05 | +7.05 | +5.75 | +7.45 | +6.45 |
Copyright MEES 2008.
