Weakening eastern crude markets to blame for Saudi Arabia cutting OSPs?
September 30, 2014
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Saudi Arabia has cut OSPs for its main grades again, to Asian buyers for October.
The m-on-m decline was widely anticipated, given the recent weakening of the eastern crude markets, with Dubai/Oman timespreads at a 3-year low in August. Furthermore, the recent weakness of Brent relative to Dubai, due to an overhand of crude in the Atlantic basin, made Middle Eastern crudes less competitive against Brent-linked West African and Latin American crudes. This opened up the arbitrage flow into Asia, which displaced demand for high-sulphur grades in the region, putting further pressure on Duabi-linked Middle East crudes.
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