Riyadh: Saudi Arabian Oil Company, the world's largest crude exporter, raised the premiums that will set October official selling prices for its light and medium grades sold to refiners in Asia less than buyers expected.
The state-owned producer, known as Saudi Aramco, increased the monthly price formula for its Arab Light grade to Asia by 50 cents a barrel to a $3.40 premium above the average of Oman and Dubai crudes, the Middle East benchmark crudes, the company said in a statement late on Tuesday. Aramco left the discount for Arab Heavy unchanged at $1.70 a barrel.
Buyers forecast Light's premium to rise 70 cents to $3.60 a barrel, according to the median estimate in a survey of five refiners in Japan and South Korea. They predicted a 20 cent rise in the Arab Heavy differential, narrowing its discount to $1.50 a barrel.
Gulf oil producers such as Saudi Arabia sell most of their crude under long-term contracts to refiners and price the oil at a premium or discount to a benchmark grade. Refiners use the monthly prices to help forecast fuel-processing margins, a factor in deciding how much of a country's crude they buy in successive months.
The refiners correctly predicted the difference between Aramco's Light and Heavy grades to Asia in October would rise to the highest in more than two years. The Light-Heavy spread increased to $5.10 a barrel, the widest since prices for June 2011.
Gains in Aramco's Extra Light and Medium crudes were less than buyers had forecast.
Aramco set Medium at a premium of $1.20 a barrel, below the $1.35 predicted in the survey. Extra Light for October was set at a premium of $5.45 a barrel to Oman and Dubai average, compared to $5.50 estimated by refiners.