Kuwait's KPC issues Khafji crude OSP differential after many years, hikes all June OSPs

Singapore — Kuwait Petroleum Corporation on Monday released the official selling price differential for June loadings of Khafji crude after several years, following the resumption of production in the shared Neutral Zone earlier this year.

KPC set the June OSP differential for its Khafji crude at a discount of $6/b against the average of Oman and Dubai crude assessments for the month of June, according to a notice seen by S&P Global Platts Monday morning in Asia.

The Khafji OSP differential was similar to KPC's differential for its mainstay export crude grade to Asia, which was also set at a discount of $6/b.

Kuwait has issued OSP differentials for Khafji crude in the past, but ceased to do so after production was suspended in 2014, according to crude oil market sources in Asia.

KPC was not immediately available for comment on the matter.

Early April, Kuwait loaded its first exports of Khafji crude in more than five years, with more cargoes loading subsequently through April and May.

Prior to the production suspension, Khafji crude had an API gravity of 28.5 degrees and 2.85% sulfur content.

The offshore Khafji field is jointly owned by Saudi Arabia's Aramco Gulf Operations Co. and Kuwait Gulf Oil Co., a unit of state-run Kuwait Petroleum Corp.

In 2019, the two countries restarted dialogue at the ministerial level to resume production in the shared Neutral Zone, which also includes an onshore field called Wafra that has been offline since 2015, and is operated by KGOC and Saudi Arabian Chevron.

Kuwait and Saudi Arabia brokered a deal in December to reopen the fields, which had been offline due to a political dispute.

JUNE OSPS

Meanwhile, KPC hiked the remainder of its OSP differentials for crude loading in June and headed to Asia, Europe and the US, the notice also showed.

For Asia-bound barrels, KPC raised the price differential of its Kuwait Export Crude blend by $1.80/b from the May level to a discount of $6/b against Oman/Dubai.

It also raised the differential for its Kuwait Super Light crude to Asia by $1.10/b from May to minus $6.50/b for June. This mirrors the quality inversion trend from other Middle East producers since May, where OSP differentials for lighter crude grades have slipped below those for medium and heavy quality crudes.

For the US, KPC raised the June price differentials for both ex-ship US Gulf Coast and FOB US crudes by $1.50/b each, to plus $3/b and plus $4.30/b, respectively. The US OSP differentials are priced against the Argus Sour Crude Index, or ASCI over June.

Meanwhile, for crude bound for Northwest Europe in June, KPC raised prices by $8/b to a premium of $5.40/b against Dated Brent.

The OSP differential for June loadings headed to the Mediterranean was raised by $8.50/b to a premium of $4.90/b against the same benchmark, while the June OSP differential for FOB Sidi Kerir was raised by $8.30/b to Dated Brent plus $4.90/b for June.

KUWAIT OSP DIFFERENTIALS: