As supply constraints and increasing demand tighten the global crude market, Saudi Arabia has raised almost all oil prices for September to Asia and Europe.
What Happened: Saudi Aramco has increased the price of Arab Light crude for sale to Asia by 30 cents per barrel above the benchmark, settling at $3.50, Bloomberg reported.
While the producer was expected to raise prices by 50 cents according to a survey of refiners and traders, the move comes after Saudi Arabia, the world’s largest oil exporter, extended a unilateral supply cut into September. This cut could potentially be extended further or deepened, the outlet reported.
In addition to the cuts, Russia has also committed to reducing its oil exports. The actions have contributed to oil posting a sixth consecutive weekly gain, marking the longest winning streak in over a year, following the extension of OPEC+ cuts and a decline in U.S. stockpiles, according to Bloomberg.
“To support the market and counter the decline in crude prices this year, Saudi Arabia’s production has been reduced to the lowest levels in years,” said Bloomberg.
Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman is currently reviewing the voluntary cuts monthly, creating uncertainty about future supply levels.
“The global economic outlook remains uncertain, with lackluster data from China and concerns about a potential recession in the U.S.,” said Bloomberg. Furthermore, according to Bloomberg Economics, Riyadh may need oil prices to reach as high as $100 per barrel to cover government spending.
Bloomberg reported that nearly all official selling prices to the Mediterranean and Northwest Europe were higher for September.
Arab Light crude in the Mediterranean was raised by $1 to $4.50 a barrel more than ICE Brent, while the price for the same grade to Northwest Europe was raised by $2 to a premium of $5.80 to the benchmark.
Produced in association with Benzinga
Edited by Priscilla Jepchumba and Judy J. Rotich