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Saudi Arabia has signaled that it is seeing rising oil demand in Asia and Europe by raising most prices for crude shipments to the regions.
While oil futures have weakened slightly this year, many traders and energy executives see them climbing – possibly to $100 a barrel – as China’s economy recovers after lockdowns lift against coronavirus and that inflation in other major economies is slowing.
State-controlled Saudi Aramco raised most official selling prices for Asia in April. The company’s main grade of Arab Light was raised to $2.50 a barrel above the regional benchmark, 50 cents above the March level.
That matched a Bloomberg survey of refiners and traders, which predicted a rise of 55 cents. This is the second month in a row that Aramco has raised prices for Asia, its biggest market.
Prices for US customers remained unchanged. Those in Northwestern Europe and the Mediterranean jumped to $1.30 a barrel.
Brent has fallen 0.1% this year to $85.83 a barrel. It has fallen by around $115 since mid-2022, with a slowing global economy and higher interest rates to counter supply disruptions triggered by Russia’s invasion of Ukraine. .
The Aramco CEO suggested last week that he saw a turnaround.
“The demand from China is very strong,” Amin Nasser told Bloomberg in Riyadh on March 1. It is also “excellent” in Europe and the United States, he said.
Saudi Arabia is the world’s largest oil exporter and tops the OPEC+ producer group along with Russia. The 23-nation alliance has hinted that it will not ramp up production until at least next year.
Aramco sells about 60% of its crude shipments to Asia, most under long-term contracts, the prices of which are reviewed monthly. China, Japan, South Korea and India are the biggest buyers.
The company’s pricing decisions are often followed by other Gulf producers such as Iraq and Kuwait.
Aramco price for April ($per barrel)
Asia (vs Oman/Dubai)
United States (compared to ASCI)
North West Europe (vs ICE Brent)
Mediterranean (against ICE Brent)
–With the help of Anthony Di Paola.
(Updates with European and US pricing details.)
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