Saudi Arabia, the world’s top oil exporter, is expected to increase crude oil prices for Asian buyers in March, following a surge in benchmark prices driven by higher demand from China and India. The hike comes as U.S. sanctions disrupt Russian oil supplies, tightening global oil availability. According to traders, the March official selling price (OSP) for Saudi Arabia’s flagship Arab Light crude could rise by $2 to $2.50 a barrel from February levels, potentially reaching a premium of at least $3.50 a barrel over the Oman and Dubai benchmark prices, the highest since January 2024.
This increase would mark the largest monthly rise since August 2022, according to a Reuters survey. The prices for Saudi Arabia’s other crude grades, including Arab Extra Light, Arab Medium, and Arab Heavy, are expected to see similar hikes of at least $1.80 per barrel. The adjustment reflects changes in the market structure for Dubai crude prices, with backwardation widening by $2.05 a barrel in January. Backwardation indicates tight supply or stronger demand when current prices are higher than those for future delivery.
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The recent surge in demand from China and India follows sanctions targeting Russian oil producers and tankers, which have disrupted supply and caused spot premiums for Oman and Dubai to rise to their highest levels since November 2022. Despite this, some traders suggest that future price increases could be limited by weak demand and thin profit margins for Asian refiners.
OPEC+ will meet on February 3 to discuss oil output policy, following their decision in December to delay the start of oil output increases until April. Saudi crude OSPs, which typically set the pricing trend for other Middle Eastern oil producers, will be announced around the fifth of each month, affecting approximately 9 million barrels per day of crude bound for Asia.
