Move is a sign that the market in the region is tightening
Aramco raises prices of light oil to Asia
Saudi Arabia raised pricing for September sales of its light oil grades to Asia in a sign that the market in the region is tightening.
State-owned Aramco increased its official pricing for Arab Light crude to buyers in Asia by 20 cents, to 25 cents a barrel less than the regional benchmark, the company said.
The Saudi oil minister Khalid Al Falih said last week his nation would cut exports in August to try to speed a decline in global inventories. The kingdom will not act alone to balance the market and other nations should improve their implementation of supply cuts, he said after meeting fellow producers on July 24 in St Petersburg, Russia.
Opec and its partners are seeking to end an oversupply of crude that triggered a drop in prices to less than half of their 2014 peak, when Brent crude fetched US$115.71 a barrel. Oil is set to show its first monthly gain of the year in July, with Brent crude rebounding to more than $50 a barrel.
Mr Al Falih said in May Aramco would “markedly” reduce it sales to the United States to try to reduce stockpiles there. Pricing for most crude grades to North America will be raised in September, Aramco said on Tuesday.
Aramco widened the discount on its Heavy crude to Asia by 20 cents, to $1.95 a barrel less than the benchmark. The spread between Aramco’s Heavy and Light crudes widened for the first time in six months, indicating the company is seeking to make the heavier crude relatively more attractive to buyers in the region. Asian refiners are generally configured to process heavier crudes.
Aramco raised pricing on all crude grades to north-west Europe and the Mediterranean region, according to the company. It also increased all pricing for crude to be sold from the Sidi Kerir terminal in Egypt, according to a price list obtained by Bloomberg.
Middle East producers compete with cargoes from Latin America, North Africa and Russia for buyers in Asia, its largest market. Producers in the Arabian Gulf region sell mostly under long-term contracts to refiners. Most of the Gulf’s state oil companies price their crude at a premium or discount to a benchmark. For Asia the benchmark is the average of Oman and Dubai oil grades.