- The company’s flagship Arab Light grade was raised to $2 a barrel over the regional benchmark.
- A 20-cent increase over the previous month’s pricing.
- This will be the first increase in the grade since September.
Saudi Arabia suddenly boosted oil prices for its primary Asian market, as well as for clients in the United States and Europe.
The decisions came despite a 7% drop in crude prices this year, as rising interest rates in the United States and Europe offset expectations about a comeback in Chinese demand following the end of coronavirus lockdowns.
Saudi Aramco, the state-owned oil company, raised the majority of the pricing for petroleum that will be exported to Asia in March. The company’s flagship Arab Light grade was raised to $2 a barrel over the regional benchmark, a 20-cent increase over the previous month’s pricing.
It’s the first increase for the grade since September, and it contradicts a Bloomberg poll of dealers and refiners, which projected a 20-cent drop.
The kingdom boosted all European prices by $2 per barrel, and most US prices by 30 cents.
Many OPEC members have recently expressed optimism about China, which is likely to be the single most important factor influencing oil price movements this year.
Haitham Al Ghais, the group’s secretary-general, expressed optimism about China. And the director of Kuwait’s national energy company claimed to Bloomberg that consumption in the world’s biggest crude importer was already on the rise and that it “is not a dead-cat bounce”.
According to Goldman Sachs Group Inc., Brent will rise back above $100 per barrel in the third quarter as China completely reopens its economy, citing low stockpiles and spare capacity among producers. Morgan Stanley has made a similar prediction.
Saudi Caution
Nonetheless, Saudi Arabia’s energy minister, Prince Abdulaziz bin Salman, stated on Saturday that the country will proceed with caution in increasing oil production.
“I will believe it when I see it and then take action,” Prince Abdulaziz said, referring to higher oil demand globally.
Saudi Arabia is the world’s largest producer of oil. It exports over 60% of its crude supplies to Asia under long-term contracts, with pricing evaluated monthly. The top four buyers are China, Japan, South Korea, and India. Other Arabian Gulf producers, including as Iraq and Kuwait, tend to carefully follow its activities.
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