Top oil exporter Saudi Arabia is expected to raise its official selling price (OSP) for all grades it sells to Asia in July, to track a jump in Middle East benchmarks although overall weak refining margins could cap price gains, industry sources said.

Saudi Arabia is expected to increase the July OSP for Arab Light crude by $3.80 a barrel on average, a survey of five refinery sources showed.

Forecasts ranged from an increase of $2-$3 a barrel to as much as $5 a barrel, as refiners’ margins weakened in May while a stronger DME Oman crude price, one of two underlying benchmarks for Saudi crude in Asia, has increased refiners’ feedstock costs, they said.

“Refining margins actually worsened” by close to $1 a barrel in May, one of the respondents said.

The DME Oman crude price was on average about $3 a barrel more expensive than cash Dubai and Oman prices set by S&P Global Platts last month, according to Reuters calculations, pushing up costs for Asian buyers of Saudi Arabian and Kuwaiti oil.

Production from the Organization of the Petroleum Exporting Countries (OPEC), led by Saudi Arabia, fell to its lowest in two decades in May and has strengthened the Middle East crude prices. OPEC and its allies including Russia are considering bringing forward a meeting to this week to discuss an extension of production cuts beyond June.

Last updated on Mon., June 1, 2020.