Aramco has raised the prices of its most popular crude oil grades for sale in Asia amid growing worry about supplies from Venezuela and Iran. Bloomberg reports the flagship grade, Arab Light, will sell for US$0.20 more, at US$2.10 per barrel more than the Dubai benchmark, which traded above US$74 a barrel at the start of this week.
This is the third price increase for Arab Light in a row, and it has brought prices to the highest since July 2014. It is, however, lower than the increase six analysts polled by Bloomberg expected, which was US$0.34.
The prices of the other Saudi grades, including Extra Light, Medium, and Heavy, will also sell at multi-year highs, Bloomberg data has revealed, with the Heavy grade selling for the highest prices since 2012.
The signal Saudi Arabia is sending with the price increase is clear enough: demand for its crude should be rising as competing supply from Venezuela dwindles amid the worst crisis the country has seen in its history and as the market anticipates a slump in Iranian exports after the return of U.S. sanctions.
Related: Elon Musk Survives Attempted Coup
But not everybody seems willing to continue buying Saudi crude at higher prices-at least not when there is alternative supply. Last month, Sinopec announced it will cut its June imports of crude from Saudi Arabia by 40 percent for the second month in a row because of unjustified high prices. An official from Sinopec's international trading arm Unipec told Reuters at the time that the grade is now considerably overvalued compared to other Middle Eastern crudes.
In April, another Unipec official told Reuters, "Our refineries think these are unreasonable prices as they do not follow the pricing methodology." Besides Sinopec, a source from another two refineries in northern Asia said they will be cutting their imports from Saudi Arabia by 10 percent as oil buyers have a hard time grasping how the Kingdom is calculating the price for its most popular grade.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More