03 January 2025: 08:30 GMT
The Saudis are a merciful bunch and didn’t want to tighten the noose too much on their customers – treat them nicely and they’ll keep coming back! The Saudis recognised the high prices in Dubai and the widening premium were a function of Totsa lifting Dubai again and again in the pricing window and did not fully reflect the price upside. Rumours circulated in Asia that Totsa made $20-30 million gains from its foray where it had a 30+ million bbl swaps position with low entry levels. The Arab Light OSP for Asia (the Saudis’ biggest buyers) was raised by 60c to reach $1.50 over the average of Dubai + Oman grades. That’s not too stringent, given the Dubai physical premium’s extraordinary strength late in December, with the penultimate premium of +$2.25 and final value of +$1.95. With the combination of bigger Chinese import quotas and a relatively low Brent flat price nearing $70 in December, and the ensuing buying rush (cough cough Totsa…), Aramco evidently chose not to reflect the bubbling up premia towards the end of the month and buyers must be happy with that!
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