Oman’s official crude price slumps to 18-year low

The official selling price (OSP) for medium sour Oman crude has fallen to its lowest level in 18 years as the Covid-19 pandemic cuts global demand.

Oman's June OSP has been set at $23.65/bl, down by $11.20/bl from a month earlier. This is the lowest Oman OSP since April 2002.

The June OSP is set based on the monthly average of the daily Singapore marker prices for the front-month June Oman futures contract on the Dubai Mercantile Exchange (DME) in April.

The OSP has been set using the monthly average of DME assessments since August 2007, before which it was set by Oman's oil and gas ministry.

Prices of Oman crude and other Mideast Gulf grades have plunged in recent months as demand has waned amid deteriorating refining margins caused by the Covid-19 pandemic. June-loading Qatari medium sour Al-Shaheen crude traded at record deep discounts of around $10/bl to Dubai earlier in April. Asia-Pacific gasoil refining margins hit a fresh 10-year low on 24 April, pressured by signs of further weakness in demand as countries in the region extend containment measures to curb the spread of the coronavirus.

But signs of recovering Chinese demand have helped support medium sour values flowing into Asia-Pacific towards the end of April.

Persian Gulf crude values are also expected to firm in the coming month on a tighter supply outlook thanks to the implementation of the Opec+ production restraint agreement on 1 May. Oman has already instructed all operators and oil producers in the sultanate to cut crude output for two months from that date. Under the terms of the deal, Oman has committed to cap its crude production at around 680,000 b/d in May and June, down by 200,000 b/d from its 883,000 b/d baseline level.

By Fabian Ng

source: Argus Media