Saudi Arabia has raised the prices of all grades it will be shipping to Asia, the U.S., Northwest Europe and the Mediterranean countries, with prices for Asian buyers increased more than expected.
Saudi Arabia’s state-held oil giant Saudi Aramco is raising March prices for Arab Light crude to Asia by $0.30 to a premium of $0.15 to the regional Oman/Dubai benchmark, Bloomberg reported on Thursday, citing an e-mailed statement by the company.
A median estimate in a Bloomberg survey of six refiners and traders had pointed to Aramco raising the Arab Light official pricing to a premium of $0.10 over the Oman/Dubai benchmark, which many Middle East state oil companies use to price their crude grades bound for Asia.
The majority of traders surveyed by S&P Global Platts expected earlier this week Aramco to raise the March official selling price of Arab Light crude for Asia by $0.10-$0.20.
Reuters trade sources had also expected a rise by at least $0.10 and up to $0.30 for the Arab Light.
“It’s simply because of the market structure as the contango is slightly shallower,” one trade source told Reuters.
After the OPEC supply cuts entered into force, Saudi Arabia – as leader of the cartel – has been eager to show it would lead by example, and even said last month that its production had dropped to below 10 million bpd, to the lowest level since February 2015. If this were the case, the Saudis have been cutting more than the volumes they pledged in the OPEC deal: to cut 486,000 bpd to 10.058 million bpd. Related: Top 10 Bankruptcies Of 2016 Feature 9 Energy Firms
Even with the cuts, Saudi Arabia is careful not to drop its market share in important north Asian markets such as Japan, for example.
Last month, Saudi Aramco was said to have reduced February term crude oil loadings to some buyers in India and Southeast Asia, but is shipping full delivery volumes to North Asia in order to protect its market share there. Last week, a deputy minister at Saudi Arabia’s oil ministry said that the Kingdom would not reduce its crude oil exports to Japan despite the OPEC agreement. Saudi Arabia supplies the largest part of Japan’s crude imports at a daily rate of 1.13 million bpd as of 2015.
By Tsvetana Paraskova for Oilprice.com
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