Middle Eastern conflict disrupts oil price benchmarks, Saudi Aramco premium may surge to $40 per barrel

Odaily Planet Daily News: Due to the war in Iran throwing Saudi Arabia’s benchmark crude oil official pricing into chaos, as oil prices surge, anxious Asian buyers are trying to steer the country toward alternative supply pricing mechanisms. Saudi Aramco is finalizing the cost of May-loading crude oil, and the price sheet is expected to be delivered to buyers within the next few days. According to traders, based on region-based benchmark spot pricing, the premium for its flagship Arab Light crude oil is expected to jump to an unprecedented level of around $40 per barrel, compared with a premium of only $2.50 in April. Saudi Aramco’s monthly contract prices are typically set as a differential to a benchmark price composed of Dubai prices assessed by S&P Global Platts and Oman crude oil futures from the Gulf exchange. Traders said some Asian refiners have already asked Saudi Aramco to link its crude to Brent futures, but other alternatives have also been proposed. These include using oil prices from the Shanghai Futures Exchange, then subtracting transportation and other related costs, and even referencing other crudes such as the UAE’s Upper Zakum. A trader from a refiner that imports crude oil regularly from Saudi Arabia said negotiations between Saudi Aramco and its customers are still ongoing, and no final pricing decision has been made. They added that if the premium level is set at around $40 per barrel, it could lead to lower purchasing volumes. (Jinshi)