Saudis raise oil prices for Asian customers as market tightens

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Saudi Arabia has raised oil prices for its customers in its main market, Asia, more than expected after crude surpassed $ 70 a barrel and OPEC forecast global demand to far exceed $ 70 a barrel. ‘offer during the rest of the year.

Public energy company Saudi Aramco raised its key Arab Light grade for July shipments to Asia by 20 cents to $ 1.90 a barrel above a benchmark. Analysts Bloomberg polled expected an increase of just 10 cents.

The kingdom sends more than 60% of its exports to Asia, with China, India, South Korea and Japan being the biggest buyers. Last month he shipped 6.1 million barrels per day, according to preliminary data compiled by Bloomberg.

Prices for four of Aramco’s five Asian grades were increased, with the only decrease occurring for heavy crude. All ratings for Europe have been raised, while those for the United States have been maintained the same as in June.

The move is the reverse of Aramco’s cut for Asian customers in June, a move made in early May as new cases of coronavirus have hammered fuel demand in India.

The Asian country and others like Japan and Malaysia are still struggling to slow the pandemic. Still, the Organization of the Petroleum Exporting Countries predicted this week that oil stocks will decline rapidly from August, as lockdowns ease in major economies and travel resumes.

OPEC and its partners – a group of 23 countries led by Saudi Arabia and Russia – have stuck to a plan to increase production this month and into July. But they declined to say what their plans were beyond those dates.

Brent crude rose 38% in 2021 to a two-year high of around $ 71.20 a barrel. He extended the gains this week on the new outlook for OPEC and because nuclear talks between Iran and world powers have stalled. If the parties reach an agreement, the United States is likely to ease sanctions on Tehran’s oil exports.

Read more: Iran nuclear deal elusive as major powers postpone until next week

The rise in oil has raised fears of accelerating inflation and calls for OPEC +, as the alliance is known, to boost production.

“There will always be a good amount of supply to meet demand,” Saudi Energy Minister Prince Abdulaziz bin Salman said Thursday at a forum in St. Petersburg. “We will have to see the demand” before producers increase the supply, he said.

OPEC + made unprecedented production cuts in May last year as the pandemic shut down businesses and crushed the global economy. They have slowly relaxed those restrictions, but are still withholding around 6 million barrels of crude a day.

Most countries in the Persian Gulf set official selling prices each month as a premium or discount over a benchmark. Aramco’s PSOs serve as a barometer for oil markets and often set the trend for states like Kuwait and Iraq.