Saudi Arabia is set to significantly increase its official selling prices (OSPs) for crude oil to Asia for March shipments, marking the largest hike since January 2024. This move is driven by tighter supply and rising benchmark prices, largely influenced by OPEC+ production cuts, reduced exports from Iran and Russia, and recent U.S. sanctions on Russian oil.
As the Middle East’s key crude benchmarks continue to surge on the back of limited Russian supply to major Asian markets like China and India, Saudi Arabia’s state-owned oil giant, Aramco, is expected to raise its flagship Arab Light grade prices by up to $2.50 per barrel over Oman and Dubai benchmarks, according to a Reuters survey of Asian refiners. Some refinery sources predict the hike could reach as high as $3 per barrel.
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If the expected increase is confirmed next week, the price of Arab Light could rise to a premium of at least $3.50 per barrel over the Oman/Dubai average, the highest premium since early 2024. This would follow Saudi Arabia’s February price hike, which surpassed expectations due to tightening supply in Asia, exacerbated by ongoing OPEC+ cuts and the decline in Russian and Iranian oil exports.
The surge in Oman and Dubai benchmarks in the past month has been driven by the decrease in Russian and Iranian output, with the U.S. imposing stricter sanctions on Russian oil trade starting January 10. Saudi Arabia typically announces its pricing for the next month by the 5th, setting the pace for other Middle Eastern oil producers’ prices in Asia.
