Iran Tension Disrupts Pricing System: Saudi Aramco's Crude Oil Premium Soars to $40, Asian Buyers Urged to Switch to Brent and Other Alternative Benchmarks

BlockBeats News, March 30th. Due to the Iran war causing turmoil in the Saudi Arabian oil's regular pricing, as oil prices soar, anxious Asian buyers are attempting to steer the country towards an alternative supply pricing mechanism.

Saudi Aramco is finalizing the cost of shipping oil in May, with the pricing table expected to reach buyers in a few days. According to traders, based on the conventional price measurement of a regional benchmark, the premium for its flagship product Arab Light crude is expected to soar to an unprecedented level of around $40 per barrel, compared to a $2.50 premium in April.

Saudi Aramco's monthly contract prices are usually set as price differentials relative to the underlying benchmark, which consists of the Dubai price assessed by S&P Global Platts and the Oman crude futures of the Dubai Mercantile Exchange. Traders say some Asian refiners have already requested Saudi Aramco to peg their crude to Brent futures, but other alternative proposals have also been put forward.

This includes using the Shanghai Futures Exchange oil price, then deducting transportation and other associated costs, or even referencing other crudes such as the UAE's Upper Zakum. Refiners and traders importing crude oil from Saudi Arabia regularly say negotiations between Saudi Aramco and customers are still ongoing, with no final pricing decision made yet. They add that if the premium level is set at around $40 per barrel, it could lead to a decrease in purchase volume. (Jinse)