Saudi Arabia may cut official selling prices of most of its oil grades for Asian buyers next month, Reuters reported. reportedciting refining industry sources.

Based on a poll of six of these sources, Reuters expects the Saudis to cut prices to between $0.30 and $0.50 per barrel in December, which would be in line with changes in Dubai benchmark price last month, the publication notes.

Lowering prices, however, would do the Saudis a disservice compared to international prices. This would signal a perception that demand is low enough to necessitate price cuts, which in turn would reinforce traders’ bullish sentiment, possibly driving prices even lower.

According to the source interviewed, prices for some heavier grades could see smaller price drops thanks to strong demand for high-sulfur fuel oil from the maritime industry. This demand has driven up refining margins for the heavier fuel, fueling refiners’ appetite for the feedstock.

Based on the poll, Reuters forecasts that Saudi price cuts in December will be between $0.27 and $0.50 per barrel of Arab Extra Light, between $0.30 and $0.50 per barrel of Arab Light ; and up to $0.40 per barrel of Arab Medium and Arab Heavy.

Bloomberg reported Earlier this week, demand for high-sulfur fuel oil was rising as ships made longer voyages to avoid Middle East waters amid hostilities between Israel and its neighbors. Market data last week showed the discount between high-sulfur fuel oil and Singapore’s benchmark crude was narrowing, indicating stronger demand for the fuel.

Demand for the fuel remained strong even after the International Maritime Organization’s fuel standards tightened, as those standards allowed shipowners to install scrubbers that remove sulfur, which is a pollutant, from the fuel during its processing. combustion.

By Charles Kennedy for Oilprice.com

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