Saudi May Lower January Arab Light OSP to Asia: Reuters Survey

Saudi Arabia may lower the January OSP for its flagship Arab Light crude to Asia for the first time in seven months, despite an extension of its voluntary supply cut according to a Reuters survey.

• Saudi Aramco may cut the January OSP for Arab Light by around $0.70-1.50/bbl to +2.50/3.30/bbl over the Oman/Dubai average, according to six respondents surveyed by Reuters.
• Survey respondents also expected Saudi Aramco to impose bigger cuts on the OSPs for lighter grades than the heavier grades due to pressures from arbitrage cargoes from Atlantic Basin.
• In comparison, a Bloomberg survey of six refiners and traders said Saudi Arabia will cut the OSP for Arab Light to Asia in January by $1.05/bbl.
• This is despite the extension to Saudi Arabia’s voluntary output cuts until the end of 1Q 2024 and additional production cuts by other OPEC+ members totalling around 2.2mbpd.
• "The OPEC+ cut was not so deep. So, Saudi will have to secure its market share by lowering its oil prices," said one respondent.
• "Saudi needs to respond to the market dynamics...Oil inventory is building up globally but demand growth is not catching up," said another respondent.
• Aramco typically releases its OSPs around the fourth or fifth of each month.