The Middle East crude benchmarks started July trading at lower premiums than the previous month with traders awaiting official selling prices from producers.
Saudi Arabia is in August expected to cut the price for flagship Arab Light crude from the highest in four years, after refining margins in Asia dropped to a two-year low, trade sources said on Monday.
The official selling price (OSP) for Arab Light crude could fall by 20-40 cents a barrel in August, a Reuters survey of six Asian refiners and traders showed.
"Arab Super Light, Arab Extra Light and Arab Light all need price adjustments to stay competitive with other light grades," said a trader with a North Asian firm, adding that there were ample supplies of such oil in the market.
On the other hand, a recovery in fuel oil margins and robust summer demand will support Arab Medium and Arab Heavy OSPs, leading to steady or higher prices in August, five of the six survey respondents said.
Separately, ADNOC and Qatar Petroleum are also expected to reduce their OSPs after spot cargoes traded at discounts of 20 cents or more last month, traders said.
The OSP premiums for Murban and Das could fall by 20 cents, while that for Upper Zakum could drop more than 10 cents, they said.