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Saudi Arabia Raises Oil Prices to Asia
The world’s largest crude exporter, Saudi Arabia, has raised the price of its flagship grade to Asia by more than expected amid high volatility in international oil prices amid the escalating conflict in the Middle East.
Saudi Aramco in the weekend raised the price of its Arab Light grade loading for Asia in November by $0.90 per barrel to a premium of $2.20 a barrel above the Dubai/Oman benchmark. The Dubai/Oman quotes are the benchmark against which Middle Eastern producers price their supply to Asia.
Refiners and traders in Asia had expected the rise to be more modest, by about $0.65 per barrel.
While it raised the price of its oil to Asia, Saudi Arabia cut the price of all its grades loading for the U.S. and Europe next month.
The cut in prices for markets outside Asia was “possibly in an effort to regain market share in the European market,” ING commodities strategists Warren Patterson and Ewa Manthey wrote in a note on Monday.
“The divergent price views for different regions may also hint at expectations of local imbalances in the oil market,” the strategists added.
Last month, the Kingdom slashed its official selling prices (OSPs) for October to Asia, amid worsening refining margins in China and the wider Asian region and weaker Dubai benchmark prices. Trade sources estimated that Saudi Arabia would increase its crude oil supply to China in October after the price cut.
But the latest pricing, in which Aramco raised its prices to Asia, could reflect expectations of stronger demand in the region.
The price move from Saudi Arabia came days after the OPEC+ group left its current production policy unchanged, expecting to begin adding supply to the market in December.
The new pricing also comes amid rallying oil prices, which gained about 8% last week on the Israel-Iran standoff.
By Charles Kennedy for Oilprice.com
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