Saudi Arabia eyes record-high premium for Asian oil customers despite crude's recent slump

• Saudi Arabia is expected to charge its highest-ever premium for oil cargoes headed to Asia, according to Bloomberg.
• The world's top oil exporter is planning a $10.80-per-barrel markup for its Arab Light crude over the regional benchmark price.

Saudi Arabia is expected to charge its highest-ever premium for oil cargoes headed to Asia, even as traders see weakness in spot markets, according to a Bloomberg survey.

The world's top oil exporter and de facto leader of OPEC is planning a $10.80-per-barrel markup for its Arab Light crude over the regional benchmark price.

But a premium that high could hit demand for extra oil supplies as Asian refineries have seen narrower margins, traders told Bloomberg. Margins for gasoline in Asia have declined 70% from June while diesel fell 39%.

In addition, refiners in Asia have been running at full-capacity since Russia's invasion of Ukraine, and are considering scaling back operations starting in September, weighing further on demand.

Meanwhile, oil prices have slumped recently amid growing fears of a recession and global crude benchmarks are on pace for two months of consecutive losses, which hasn't happened since late 2020.

Saudi Arabia's expected markup for Asian crude also comes as Russia's war on Ukraine has shifted trade patterns.

Saudi Arabia and Iraq are helping Europe wean off of Russian crude, which is increasingly headed to Asia. Europe has imported more than 1 million barrels per day via the SuMed pipeline in the first three weeks of July, nearly double from a year ago, according to shipping data compiled by Bloomberg. The volumes in the pipeline, which transits through Egypt, are mostly Saudi oil but also include Iraqi crude.