Saudi Arabia raises oil prices in Asia

The world’s biggest crude exporter, Saudi Arabia, raised the price of its flagship class to Asia by more than expected amid high volatility in international oil prices amid escalating conflict in the Middle East.

Saudi Aramco over the weekend raised the price of its November Arab Light cargo to Asia by $0.90 a barrel, to a $2.20 a barrel premium over the Dubai/Oman benchmark. Dubai/Oman quotes are the benchmark by which Middle Eastern producers price their supplies to Asia.

Refiners and traders in Asia had expected the increase to be more modest, by about $0.65 a barrel.

While raising the price of its oil in Asia, Saudi Arabia cut the price of all its grades for the US and Europe next month.

The drop in prices for markets outside Asia was “possibly in an effort to regain market share in the European market,” ING commodities strategists Warren Patterson and Ewa Manthey wrote in a note on Monday.

“Divergent price views for different regions may also suggest expectations of local oil market imbalances,” the strategists added.

Last month, the Kingdom cut its official selling prices (OSP) for October to Asia amid worsening refining margins in China and the wider Asian region and weaker benchmark prices in Dubai. Trade sources estimated that Saudi Arabia will increase its crude supply to China in October after the price cut.

But the latest price, in which Aramco raised its prices in Asia, could reflect expectations of stronger demand in the region.

The change in prices in Saudi Arabia came days after the OPEC+ group left its current production policy unchanged, expecting to start adding supply to the market in December.

The new price also comes amid a surge in oil prices, which gained about 8 percent last week following the Israel-Iran conflict.

By Charles Kennedy for Oilprice.com

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