Saudi Arabia, the world’s top oil exporter, raised July crude oil prices for Asian buyers to higher levels. Amid concerns about tight supply and expectations of strong demand in summer.
The official selling price (OSP) for July-loading Arab Light to Asia hiked by $2.1 a barrel from June to $6.5 a barrel over Oman/Dubai quotes, recorded in May. That was much higher than most market forecasts for an increase around $1.5. Only one respondent of six in a Reuters poll had predicted a jump of $2.
The hike by state oil producer Saudi Aramco (2222. SE) despite an agreement by OPEC and states to boost output by 648,000 barrels per day in July and a similar amount in August to offset Russian losses. That compares with an initial plan to add 432,000 bpd a month over three months until September.
But the increases have been divided across member countries including Russia and states such as Nigeria which struggle to meet their targets. Countries in the northern hemisphere, such as the United States, typically kick off their driving seasons in July. China, the world’s No.1 oil importer, is also re-opening some cities such as Shanghai after lengthy COVID-19 lockdowns.
“Demand is also very strong in this cycle and Saudi can afford to hike OSPs,” said another Asian oil trader. Some demand for Saudi oil could be countered by persistent flows of Russian oil to China and India.
Moscow says it is carrying out a “special military operation” to disarm Ukraine and protect it from fascists. Ukraine and Western countries dismiss Russia’s claims as a pretext to invade. Saudi Aramco on Sunday night also raised its OSP for European and Mediterranean buyers, but kept U.S. differentials unchanged.
-Reuters.