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• To highlight the refining mismatch, this chart shows the
monthly price discount for Arab Heavy offered by Saudi Arabia to North
American buyers.
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• The movement down
by the line reflects an increasing discount.
For October, Saudi Arabia is selling Arab Heavy for $13.40 less than
the price for WTI.
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• Note that while
Saudi Arabia steepened the discounts sharply early this year, they had been
drifting downward over the past several years as this grade of crude has been
less sought by refiners
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• What really is super tight is not the global crude oil
market in general, but the global market for light sweet crudes, and this is
what is driving price.
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