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State-owned Saudi Aramco is raising oil prices to its Asian customers by $1.10, the biggest jump in prices from Aramco in some 14 months.
In a statement issued on Thursday, Aramco that it would raise its official selling price for its benchmark Arab Light crude by $1.10 to its customers in Asia, which puts it at about 25 cents more than Oman and Dubai benchmarks.
The price rise indicates that the Saudis feel Asian demand is on the upswing and that it is more confident in its market share now.
Asia is the largest market for the Saudis, and accounts for more than 50 percent of all Saudi crude exports.
Related: Why Oil Prices Will Likely Drop Below $40 Soon
“Refinery demand is expected to recover,” said Ehsan Ul-Haq, a senior analyst at industry consultant KBC Energy Economics in London. “Cargoes loaded in June will arrive in Asia in July, when demand will return after the seasonal turnaround period. Saudi Arabia may also use more crude at home in the summer, when electricity usage typically rises.”
A similar hike was undertaken by Aramco a year ago, in April 2015, when prices were up by $1.40.
The news also helped boost oil prices today, complemented by the raging wildfires in the Canadian oil sands patch and chaos in Libya.
Related: A 4.5-Million-Barrel Per Day Oil Shortage Looms: Wood Mackenzie
But despite an impressive first quarter increase, oil prices are still down by more than 60 per cent from their June 2014 peak as a surge in U.S. production coincided with a slowdown in demand growth from China, creating a massive over-supply.
Aramco had cut prices for its cargoes to Asia in a bid to defend its market share.
Saudi Arabia, the world’s largest crude producer, produced 10.27 million barrels a day in April.
By James Burgess of Oilprice.com
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James Burgess studied Business Management at the University of Nottingham. He has worked in property development, chartered surveying, marketing, law, and accounts. He has also…