Saudis may pause oil price hike for Asia as market weakens

Saudi Arabia may refrain from increasing its flagship oil price for Asian customers for the first time in six months as refinery margins weaken across the region, undercutting demand for physical cargoes.

Saudi Aramco is seen keeping Arab Light pricing to Asia for December unchanged on-month, according to the median in a Bloomberg survey of seven traders and refiners.

The world’s biggest crude exporter had boosted the pricing every month after June as demand stayed healthy and stockpiles shrank.

While Brent futures have risen since the Hamas’ attack on Israel this month, global physical markets have shown signs of softening as profits from turning crude into fuels fell, while the cost of shipping cargoes surged. At the same time, Citigroup Inc. forecast crude flows into China — the top importer — are set to “stay more moderate” as high prices may limit purchases for stockpiling.

Saudi Arabia, which leads the OPEC+ alliance along with Russia, has been at the forefront of efforts to support crude prices by agreeing to group-wide supply cuts and then supplementing those with major voluntary reductions of its own.

In the survey, more than half the respondents expected Arab Light pricing to be steady. Physical spot premiums started to slump in the final week of the trading cycle for December-loading barrels in Asia as Chinese buyers were less active.

Saudi Aramco typically releases its crude pricing to global customers in the first five days of the month.