SINGAPORE - Saudi Arabia has increased the price of crude it sells to Asia in September by less than forecast, traders said on Thursday, as the world's biggest oil exporter defends its market share amid slowing demand.
Refining profits have fallen to the lowest level of the year in Asia, prompting refiners to cut output even as the Organization of Petroleum Exporting Countries pumped at historic highs in July.
Saudi Arabia maintained output near record levels in July as the group show no sign of wavering in their focus on defending market share instead of prices.
State-run oil firm Saudi Aramco was expected to raise official selling prices (OSPs) for most grades by about US$1 a barrel in September from the previous month on the back of a stronger Dubai benchmark, according to a Reuters survey on Aug. 3.
But the price hike for flagship Arab Light was at the low end of market's expectation, while price gains for Arab Medium and Heavy OSPs were half of what traders had expected.
An analyst at a western oil firm described the Saudi OSPs as"generous" and a trader with an Asian refiner said sharper hikes could have prompted refiners to switch to cheaper crude from other producers. "The Saudis are trying not to erode their (market) share with a high OSP," said the trader.
Saudi crude OSPs set the trend for Iranian, Kuwaiti and Iraqi prices, affecting more than 12 million barrels per day (bpd) of crude bound for Asia.