Aramco reduces oil differentials for Europe refiners
The reductions by Saudi Aramco reflect the anticipated reopening of the Ras Lanuf and Es Sider terminals in Libya, which could increase that country's crude oil exports by 500,000 bpd. They also reflect the intention for Saudi oil to remain competitive in southern European markets.
While differentials to the US have not changed from July to
August, Saudi Aramco has reduced its differentials for other
destinations, especially Europe, the US Energy Information
Administration (EIA) said on Friday.
Aramco sells its oil to long-term customers at an official
selling price (OSP). Saudi Aramco adjusts the OSP monthly
based on specific conditions in different regions of the
world, the EIA explained.
For example, refiners in the US that import Arab Light
crude oil this month will expect to pay the Argus Sour
Crude Index (ASCI) price plus a differential of +$3.65/bbl.
an refiners could be getting
better discounts, the EIA reported in its "Today in
"According to Arab Oil & Gas, these reductions reflect
the anticipated reopening of the Ras Lanuf and Es Sider
terminals in Libya, which could increase that country's crude
oil exports by 500,000 bpd," the EIA wrote. "They also
reflect the intention for Saudi oil to remain competitive in
Saudi Aramco's OSP is calculated on a differential to a crude
benchmark based on destination and crude quality, taking into
account product yields and local market conditions. Each
month, Aramco publishes these differentials, which determine
the OSP for the following month.
- Asia. For crude oil exported to Asia,
the OSP is a differential to the average of Dubai and Oman
crude prices published by the pricing agency Platts.
- Europe. Crude oil exported to Europe and the Mediterranean has
an OSP based on the Brent Weighted Average (BWAVE)
published by IntercontinentalExchange.
- United States. Crude oil exported to
the United States has an OSP based on the Argus Sour Crude
Index (ASCI), which is a price index based on crude oil
produced from oil fields (Mars, Southern Green Canyon, and
Poseidon) in the US Gulf Coast.
Saudi Arabia is the world's second-largest producer,
trailing only the US.