Saudi Arabia, the world’s largest crude oil exporter, has raised the price of its flagship oil grade for Asia more than analysts expected. This decision comes as international oil prices remain volatile due to the ongoing conflict in the Middle East.
Over the weekend, Saudi Aramco increased the price of its Arab Light grade for November deliveries to Asia by $0.90 per barrel. This new price is set at a premium of $2.20 above the Dubai/Oman benchmark, which is used to price Middle Eastern oil exports to Asia.
Analysts and traders had anticipated a smaller increase, around $0.65 per barrel. In contrast, Saudi Arabia reduced prices for all its oil grades scheduled for delivery to the U.S. and Europe next month.
According to ING commodities strategists Warren Patterson and Ewa Manthey, this price cut for markets outside Asia may aim to regain market share in Europe. They noted that the differing price strategies for various regions suggest expectations of local imbalances in the oil market.
Last month, Saudi Arabia had lowered its official selling prices for October to Asia due to declining refining margins in China and across the region, as well as weaker Dubai benchmark prices. Following the price cut, trade sources predicted that Saudi Arabia would boost its crude oil supply to China in October.
The recent price hike for Asia may indicate stronger demand expectations in the region. This adjustment follows the OPEC+ group’s decision to maintain its current production policy, with plans to increase supply starting in December.
The new pricing also coincides with rising oil prices, which surged approximately 8% last week amid tensions between Israel and Iran.
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