Oil price may drop more in Asian market

On 13 April, Saudi Arabia announced the Official Selling Prices (OSPs) for its May crude oil exports, Report informs, citing World Pipelines.

The new OSPs speak volumes about Saudi Arabia's crude export strategy after agreeing to cut production in the OPEC+ deal on 10 April 2020.

Wood Mackenzie research director Sushant Gupta said: “Looking at the May OSPs, it is clear that Saudi Arabia wants to ensure its crude remains very competitive in Asia. It has almost doubled the discounts to Asian refiners in May 2020 compared to April 2020. Asian refiners are to enjoy the steepest discounts compared to other regions.”

Saudi Arabia increased the May 2020 OSPs to the US refiners, indicating a desire to export lower volumes to the US. For Saudi Arabia, these volumes are less lucrative.

For Europe and the Mediterranean, the OSPs are maintained, continuing the pressure on Russian Urals’ pricing towards Europe.

Crude runs in Asia are expected to recover from a low point of 26 million bpd in April 2020 to about 29 million bpd by June 2020, as a result of an expected recovery in oil demand.

According to “Wood Mackenzie,” no doubt exports to Asia from Saudi Arabia and Russia will be impacted: 'However, because Asia provides a higher netback to both Russia and Saudi Arabia, both will ensure that Asian market volumes fall the least as they cut output. We would expect both producers to divert volumes towards Asia from other regions.’

nin qənaətincə, OPEC+ formatının iştirakçılarının Asiya bazarlarını daha əlverişli gördükləri üçün həmin bazarları əldən verməmək üçün hətta başqa regionlara tədarükü azaltmağa belə gedə bilərlər.