Singapore: Top oil exporter Saudi Arabia is expected to raise prices for all crude grades it sells to Asia in July for a third straight month after Middle East crude benchmarks jumped, trade sources said on Thursday.

The producer is likely to increase the official selling price (OSP) for flagship Arab Light crude by up to $1 a barrel to the highest since January 2014, a Reuters survey of four sources at refineries showed.

U.S. sanctions on Venezuela and Iran and a Russian oil crisis have tightened sour crude supplies in Asia, pushing spot Middle East and Russian crude premiums to multi-year highs.

Strong demand for prompt supplies this month caused the backwardation in the price spread between first- and third-month Middle East benchmark Dubai to widen by about $1.20 a barrel. Backwardation refers to a market where prompt prices are higher than later prices.

The extent of Saudi Arabian price hikes depends on whether the country takes into account weaker margins for naphtha and fuel oil, the sources said, as those would lead to smaller price gains for grades such as Arab Extra Light and Arab Heavy that have a higher yield of such products.

The market structure “is very bullish but refining margins do not support that”, one of the sources said. All sources declined to be identified as they are not authorized to speak to media.

Refiners in Singapore, South Korea and Thailand have planned to reduce output after profit-margins slumped to their lowest for the season since 2003.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.

State oil giant 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.