Saudi, Iraqi Sept. Crude OSP Cuts

A sharp recovery in oil product margins over July may lead Saudi Aramco and Iraq's SOMO to tone down the extent of price cuts on crude oil headed to Asia in September, a survey of market participants by S&P Global Platts showed this week.
"[There] should be cuts, but restrained cuts due to product margins, especially on the lights, [where] naphtha has been the strongest [performer]," a Singapore-based crude trader said.
Backwardation in the benchmark Dubai cash/futures spread dipped 73 cents per barrel on average between June and July, making a strong case for lower official selling prices, or OSPs, from Middle East producers, crude traders and refiners told Platts. 
"Based on the [Dubai crude] structure, Arab Light should be down 75 cents per barrel," an Asia-based refinery source said. 
But product margins such as naphtha and gasoline outperformed expectations over July, and would likely lead to national oil companies, or NOCs, tempering the OSP reductions, they said.