The Commodities Feed: Saudis increase January OSP’s

The Commodities Feed: Saudis increase January OSP’s

After a weak close on Friday oil markets have opened stronger this morning. Brent is trading comfortably back above US$70/bbl, after the Saudis raised their official selling prices (OSP) for all grades of their crude oil into Asia for January. Aramco's flagship Arab Light into Asia was increased by US$0. 60/bbl MoM to US$3. 30/bbl over the benchmark. All grades to the US were also increased, while all grades into Europe saw a cut in their OSP's for January. The increase in OSP's into Asia comes despite OPEC+ agreeing to stick to its plan of increasing output by 400Mbbls/d in January, and despite uncertainty over the Omicron variant and the expectation that the market will be better supplied in 1Q22. What makes the move even more strange is that the increase has come at a time when the Brent/Dubai spread has been narrowing. A weaker Brent/Dubai spread along with stronger Saudi OSP's will make Atlantic Basin crude into Asia more competitive, possibly weighing on demand for Saudi crude. However, the move suggests that the Saudis have confidence in the demand outlook, and the market appears to be taking comfort in that. The latest positioning data shows that speculators cut their