Saudi Arabia may increase its August crude oil prices to Asia to the highest levels seen since April, driven by a mix of geopolitical tensions and soaring summer fuel demand.
According to a Reuters survey of refinery sources, the official selling price (OSP) for Saudi’s flagship Arab Light crude could rise by 50 to 80 cents per barrel, pushing prices to between $1.70 and $2 above the Oman/Dubai average. If confirmed, this would mark a four-month high.
The hike follows the recent Iran-Israel conflict, which triggered fears over disruptions in the Strait of Hormuz — the critical waterway for nearly 20% of global oil trade. Brent crude jumped to $87 per barrel at the height of the tensions in mid-June before easing after a ceasefire.
A volatile market, strong demand
Middle East oil benchmarks have also seen sharp fluctuations. Dubai crude’s premium over swaps soared to a near four-month high of $3.34 per barrel on June 19 before closing at $2.73. For June, the average stood at $1.88, a 61-cent increase from May.
Saudi Aramco, the world’s largest oil exporter, typically adjusts OSPs based on shifts in global prices and refinery margins. While the company doesn’t publicly comment on OSP changes, traders expect the August pricing to follow market strength.
“Demand from Asia is robust,” said one refining source. “Refiners are asking for more term supplies for August and September.”
Asian refiners are ramping up production to meet increased gasoline and diesel consumption during the region’s peak travel season. Meanwhile, a strong preference for long-term contracts over spot cargoes is also driving demand for stable pricing from Middle Eastern suppliers.
OPEC+ moves to regain market share
While rising prices reflect strong demand, gains may be capped by increased output. The OPEC+ alliance is reportedly planning to raise production by 411,000 barrels per day in August, according to four group delegates. The move is part of efforts to reclaim global market share following voluntary cuts earlier this year.
Saudi OSPs are a key reference for other Gulf oil exporters, including Iran, Iraq, and Kuwait. Together, these prices influence roughly 9 million barrels per day of crude headed for Asia — the world’s largest oil-importing region.
Aramco is expected to announce its August prices after the OPEC+ meeting on July 6.
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