Middle East crude complex shrugs aside OPEC+ delays, focus on supply cuts

Singapore — The benchmark Dubai crude futures complex was firmly higher in the first half of the Asian trading day on June 5, as market participants shrugged aside OPEC+ meeting delays to hone in on the inevitability of the alliance's supply cut extension.

The August Dubai crude futures contract rose 2.6% overnight from its close at $38.70/b on June 4, to be pegged at $39.69/b at 11 am (0300 GMT) in Singapore on June 5.

Dubai's rise outstripped that of ICE Brent futures, which rose 1.4% to $40.01/b in the same period, causing the August Brent/Dubai Exchange of Futures for Swaps spread to narrow to 32 cents/b at 11 am in Singapore on June 5. The spread -- marking Brent's premium to Dubai -- was assessed at 77 cents/b at 4:30 pm in Singapore on June 4.

Crude market participants in Asia shrugged aside delays in OPEC+ negotiations, choosing instead to focus on a highly likely production cut extension of 9.7 million b/d to July.

"It's only a matter of time," a trader based in Singapore said.

The crude industry also adjusted its expectations of receiving official selling prices from producers this week, with OSPs likely to be issued once a decisive announcement has been made from the producer-alliance, they said.

Leading Middle East oil exporter Saudi Aramco tentatively expects to issue its OSPs on June 7, several sources confirmed to Platts on June 5.

"June 7, that's the plan for now," a source familiar with the matter said.

"No chance on OSPs yet, on Sunday I would suggest," a crude trader based in Singapore said.

Aramco is "largely waiting for OPEC+" talks to conclude before making a decision on pricing, the first source said, adding that "No one wants to release prices before a conclusion from OPEC+ -- that's a risk no one wants to take in case anything happens that goes against your pricing."

Member countries are currently in the throes of negotiating quota compliance -- with Iraq in the spotlight for non-compliance -- and expect to settle their differences before heading into a final meeting, the exact date of which is still unclear. Initially, it was scheduled for June 9-10, then June 4 was proposed, with some market sources now citing a possible official meeting for June 6.

July OSPs issued by Saudi Arabia, UAE, Kuwait, Qatar, Iraq and Iran are expected to be raised in a range of between $2/b and $5/b, results from S&P Global's monthly OSP survey in Asia showed on June 2.