The world’s top oil exporter, Saudi Arabia, raised on Thursday its official selling prices for Asia for July shipments amid rallying international oil prices and expected strong demand going forward.
Saudi Aramco lifted its OSP for its flagship Arab Light grade for key customer Asia by $0.20 to a premium of $1.90 a barrel above the Dubai/Oman benchmark, off which Middle Eastern producers price their oil going to Asia.
The increase was more than the $0.10 rise analysts polled by Bloomberg had expected.
Asian refiners also expected the rise, and they also gravitated toward a $0.10 increase, a Reuters survey of refiners showed earlier this week. The weak Asian refining margins, however, were expected to cap the increase.
Saudi Arabia raised the OSPs for four of its five grades going to Asia—the only grade which saw a decline in the price was Arab Heavy.
Aramco also raised the prices of all grades going to Europe in July, and left the prices for the U.S. market unchanged from June, Bloomberg reports.
The pricing of Saudi crude oil generally sets the trend for the pricing for Asia of other Gulf oil producers such as the United Arab Emirates (UAE), Kuwait, Iraq, and Iran. The pricing of Saudi Aramco affects as much as 12 million barrels per day (bpd) of Middle Eastern crude grades going to Asia.
The price hike for July comes after Saudi Arabia had cut its June pricing for Asia in early May in response to the surge in Covid-19 infections in India, which had a negative impact on its oil demand. Last month’s reduction was the first in several months in which the Saudis had lowered the price of their crude to Asia.
But this month, strengthened benchmarks and expectations of a rebound in oil demand prompted the Saudis to raise the prices for July.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
- Climate Revolt Against Big Oil May Lead To Surge In Crude Prices
- Hedge Funds Grow More Bullish On U.S. Crude Oil
- Biden Nixes $35 Billion In Fossil Fuel Tax Benefits