Saudi Aramco has raised the official selling price of all the grades it exports to Asia, with flagship Arab Light for delivery in June set to become $0.90 more expensive, Bloomberg reported citing a pricing list it had seen.
The move pushed international oil prices higher, Reuters reported earlier today, as it fueled expectations of stronger demand during the summer. The price hike, per Reuters, extended to Europe as well.
The new price for a barrel of Arab Light comes in at $2.90 over the regional Oman/Dubai benchmark, which signals a tighter supply of crude, ING's commodity strategist Warren Patterson said in a note, adding that despite the recent declines in oil prices, traders had increased their net long positions in Brent crude.
According to Bloomberg, the price hike for Asian deliveries of Saudi crude is likely to have an adverse effect on Chinese refiners' margins, especially coupled with predictions of weaker diesel demand.
Meanwhile, analysts have predicted that OPEC will extend its production cuts, possibly until the end of the year, although Reuters' John Kemp suggested in a recent column that they might in fact reverse the cuts modestly to avoid further production growth in non-OPEC producers such as the United States, Guyana, and Brazil, which would cost OPEC more market share.
June would mark the third consecutive month of Saudi oil price hikes, suggesting Aramco is confident enough in the strength of oil demand and the state of supply, as OPEC's de facto leader cracked down on overproducers yet again.
The latest production data, as estimated by Bloomberg, suggests OPEC produced 26.81 million barrels daily last month, which was about 50,000 bpd less than the previous month. However, Iraq was still overproducing and so was fellow OPEC+ member Kazakhstan.
Under pressure from the group, the two last week agreed to start compensating for the overproduction. Iraq reported overproduced volumes totaling approximately 602,000 bpd, while Kazakhstan accounted for 389,000 bpd in January, February, and March 2024.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com More
U.S. Power and NatGas Prices Plummet to Below Zero
Ukrainian Drones Hit Major Rosneft Refinery in Russia
First Niger Oil Bound for China Blocked in West Africa Border Row
Gas Prices Likely to Keep Falling Ahead of Peak Driving Season
Drone Attacks Take Khor Mor Gas Field Offline, Claims Lives