The OSP
for January-loading Arab Light to Asia was trimmed by US$2.20 a barrel from
December to US$3.25 a barrel over Oman/Dubai quotes, state oil producer Saudi
Aramco said on Monday.
The new OSP is just above the previous low of US$2.80 per
barrel, set for March 2022.
The change was in line with market forecasts for a cut
of about US$2 a barrel.
The Organization of the Petroleum Exporting Countries (OPEC)
and allies including Russia, known as OPEC+, on Sunday decided to keep their
plan to cut production unchanged.
The
backwardation in the Dubai market structure narrowed during trading last month,
implying that fears over near-term supply tightness for crude were easing.
The premium for front-month Dubai over the price for the
third-month averaged US$2.76 a barrel in November 2022, down from US$4.73 in
October 2022.
Saudi Arabia's OSP adjustment also came after the Group of
Seven (G7) nations and Australia agreed to a US$60 per barrel price cap on
Russian seaborne crude oil.
"Although
the market remains cautious on lifting Russian crude as the price cap is just
set, there is no doubt that more cargoes will flow to Asia and compete with the
Middle Eastern crude," said a Singapore-based trader.
Saudi
Arabia cut its January Arab Light OSP to northwest Europe by US$1.80 a barrel
from December and kept the price to the United States unchanged.
