OPEC’s most prolific oil producer and exporter, Saudi Arabia, has raised the official selling price of its crude oil to new highs for September loadings.
Saudi Arabia raised the price of all of its crude grades to its prized market, Asia, for September. Saudi Arabia raised the September price of Arab Light to the Far East by $0.50 per barrel to $9.80 over the Oman/Dubai benchmark.
OPEC’s largest producer, Saudi Arabia, typically adjusts the selling price of its crude oil a day after the monthly OPEC+ meeting. On Wednesday, the group met to discuss September production plans, ultimately deciding to raise the September quota by 100,000 bpd—26,000 bpd of which was allocated to Saudi Arabia.
Saudi Arabia also raised the price of crude oil heading to the United States, North West Europe, and the Mediterranean. Other OPEC producers often reset their prices too, following Saudi’s pricing action. It is also largely seen as a bellwether for how Saudi Arabia views future oil demand.
The pricing adjustment paints a more complete picture of the direction the market could be headed. Yesterday, OPEC raised its production quota, indicating that there was an increased need for production beyond its August target (which was already 648,000 bpd over July’s—a move that typically signals that the group sees a greater call on OPEC oil. But today, Saudi Arabia is sending a message to the market that is a bit different; it wants to cool the demand for its exports by hiking prices. This is typically a signal to the market that the Kingdom sees no need for additional production.
Saudi Arabia did make a few downward adjustments with its Extra Light grades to North West Europe and the Mediterranean.
By Julianne Geiger for Oilprice.com
More Top Reads From Oilprice.com:
- OPEC+ To Boost Production Target By 100,000 Bpd In September
- How China Could Send LNG Prices Into The Stratosphere
- Oil Falls As EIA Reports Large Crude Inventory Build
The second way is signalling to the global oil market not to expect any meaningful rise in OPEC+ production since OPEC+ has hardly a spare capacity.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert