A view shows branded oil tanks at Saudi Aramco oil facility in Abqaiq, Saudi Arabia October 12, 2019. REUTERS/Maxim Shemetov/File Photo Acquire Licensing Rights

State oil giant Saudi Aramco (2222.SE) may set the official selling price (OSP) for its medium sour crude at around $4 a barrel over the Oman/Dubai average, according to five respondents surveyed by Reuters.

Crude prices soared after a surprise attack by Palestinian military group Hamas on Israel on Oct. 7, triggering fears the conflict might escalate in the Middle East and potentially disrupt oil supply.

But the price rally has eased as there has been no physical supply removed from the market and as the outlook for growth in China, the world's biggest oil importer, remains cloudy.

"The geopolitical concerns are still lingering and there is risk of supply tightness. But a more immediate problem is that refining margins are weakening and oil demand is going down," said one respondent.

Saudi Aramco typically takes cues from the Dubai market structure when setting its OSP for Arab Light crude. Dubai's structure, which reflects the price spread between the first and third months, rose 4 cents in October from the prior month.

Profits at a typical Singapore refinery processing Dubai crude fell to an average of $2.75 a barrel in October, down from $10.60 a barrel just two months ago.

Refineries in China are lowering run rates partly as seasonal demand shrinks for refined products and as the country has not issued more quotas for product exports.

But the respondents expected Saudi Aramco to marginally increase prices for Arab Extra Light, by at least 10 cents in December from the previous month, tracking a strong performance of light sour benchmark Murban.

Saudi Aramco's OSPs are usually released around the fifth of each month, and set the trend for Iranian, Kuwaiti and Iraqi prices, affecting about 9 million barrels per day of crude bound for Asia.

Saudi Aramco officials as a matter of policy do not comment on the monthly OSPs.

Below are the expected Saudi Aramco official selling prices for December 2023 (in $/bbl against the Oman/Dubai average):