Saudi Arabia may slash January crude prices for Asian buyers

SINGAPORE, Dec 3 (Reuters): Top oil exporter Saudi Arabia is expected to slash crude prices for Asian buyers in January to the lowest in years, largely tracking a slump in Middle East benchmark prices last month, traders said on Monday.

The January official selling price (OSP) for flagship Arab Light may fall by 70 to 90 cents a barrel from December to at least a four-year low, six sources at Asian refineries said in a Reuters survey.

The price cuts come after the gap between front and third-month Dubai prices narrowed in backwardation by 86 cents in November from the month before, Reuters data showed, despite TotalEnergies snapping up as much as 15.5 million barrels of crude on the S&P Global Platts window.

Backwardation refers to the market structure when prompt prices are higher than those in future months.

Last month, spot premiums for January-loading Middle East grades also fell by about half from the previous month on weak demand.

Arab Extra Light's OSP is expected to fall in line with Arab Light, while some respondents expect to see larger price reductions for heavier grades - Arab Medium and Arab Heavy - as fuel oil margins have weakened, the survey showed.