Top oil exporter Saudi Arabia may lower its crude prices for Asian buyers in May to a three-month low, tracking the steep declines in benchmark prices this month, traders said.
The May official selling price (OSP) for flagship Arab Light crude may decline by $1.80 to $2 a barrel from April, four Asian refining sources said in a Reuters survey.
That suggests that the May Arab Light price could come at a premium of about $1.50 to $1.70 a barrel to the average of benchmark Oman and Dubai prices, down from $3.50 for April and the lowest since the February price.
The producer cut prices for April by 40 cents after consecutively hiking it for two months, as OPEC+ decided to proceed with a planned April output increase of 138,000 barrels per day, its first increase since 2022.
OPEC+, which pumps over 40% of the world's oil, will likely stick to its plan to raise oil output for a second consecutive month in May, sources have told Reuters.
May OSPs for Saudi's other grades - Arab Extra Light and Arab Medium - are expected to decrease by at least $1.85, the survey showed.
Two respondents expected those for Arab Heavy may fall by $1.80, adding that the latest US threat of 25% tariffs on Venezuelan oil-buying countries might lend some support to the grade.
The forecasts generally tracked the change in market structure for first- and third-month Dubai prices. Until 27 March, the Dubai backwardation narrowed by $1.99 a barrel from the average of the previous month, Reuters data showed.
Backwardation is a market structure when prompt prices for a commodity are higher than for future months, indicating tight supply or higher demand.
The Middle Eastern market also weakened due to more Russian supply returning to Asia since March.
