By Florence Tan
SINGAPORE, Aug 1 (Reuters) - Top oil exporter Saudi Arabia is expected to cut prices for all crude grades it sells to Asia in August to track weakness in Dubai, the benchmark for Middle East oil, several market participants said on Wednesday.
The September official selling price (OSP) for flagship grade Arab Light may fall by 40 to 70 cents a barrel from the previous month, five refiners and traders said in a Reuters survey.
The Organization of the Petroleum Exporting Countries and Russia agreed in end-June to increase output by 1 million barrels per day.
"The Arab Extra Light price is reasonable recently but the prices for Arab Light and Arab Heavy are very expensive compared with other (Middle East) grades," a trader with a North Asian refiner said.
He added that Saudi Aramco has been trying to sell more of its Arab Extra Light crude in Asia so the company will likely keep the grade's price competitive against rival grades such as Russian Sokol crude.
A second survey respondent said there were plenty of alternative supplies from Europe, the Mediterranean and the United States.
"We had a talk with Aramco and told them: 'If you want to sell more barrels, you'll have to reduce prices'," he said.
Most survey respondents expected price cuts of 50-60 cents for Arab Medium and Arab Heavy grades. However, one respondent said the strength in fuel oil cracks - the price difference between crude and fuel oil refined from it - may cap price cuts for these heavier grades.
The respondent added that the OSPs may fall by just 10-20 cents a barrel .
Saudi crude OSPs are usually released around the fifth of each month, and set the trend for Iranian, Kuwaiti and Iraqi prices, affecting more than 12 million barrels per day (bpd) of crude bound for Asia.
Saudi Aramco sets its crude prices based on recommendations from customers and after calculating the change in the value of its oil over the past month, based on yields and product prices.
Saudi Aramco officials as a matter of policy do not comment on the kingdom's monthly OSPs.
Below are expected Saudi prices for September (in $/bbl against the Oman/Dubai average):
AUG Change est.SEPT OSP
Arab Extra Light +2.50 -0.85/-0.40 +1.65/+2.10
Arab Light +1.90 -0.70/-0.40 +1.20/+1.50
Arab Medium +0.35 -0.55/-0.15 -0.20/+0.20
Arab Heavy -0.25 -0.60/-0.15 -0.85/-0.40
Source: Reuters, trade