Crude surges as producers slash discounts

The actual cost of crude oil has surged to a record high through a combination of world benchmarks rising and a sharp reduction in the discounts that large producers, such as Saudi Arabia, Iran or Mexico, are offering to refineries.

The latest in a series of cuts to discounts


The reduction has gone largely undetected outside the refinery industry because financial markets pay more attention to the price of the oil futures traded in London and New York, where prices have come within $2.50 of record highs. The reduced discounts reflect a tighter oil market after two cuts in production by the Organisation of the Petroleum Exporting Countries in the past year and its recent rejection of calls from industrialised nations to increase supplies.

Strong refining margins and more refining capacity to process low quality oil have also given producing countries the opportunity to cut discounts.

Financial Times