Khobar, June 6 (BNA) Saudi Arabia, the world’s largest oil exporter, raised July crude oil prices for Asian buyers to higher-than-expected levels amid fears of tight supply and expectations of strong summer demand.
The official selling price (OSP) for July loading from Arab Light to Asia rose by $2.1 a barrel from June to $6.5 a barrel compared to Oman/Dubai prices, far from the highest level recorded in May, Reuters reported.
This was well above most market expectations for an increase of around $1.5. And only one respondent out of six in a Reuters poll expected a $2 jump.
An Asian oil trader said, “The price jump is unexpected, especially Al Arabi Light. We were baffled by the decision.”
The increase by Saudi Aramco, the oil producer, came despite the agreement of the OPEC + countries to increase production by 648,000 barrels per day in July and a similar amount in August. That compares with an initial plan to add 432,000 barrels per day per month over the three months to September.
But the increases have been split among member states including countries such as Angola and Nigeria that are struggling to meet their goals, leading to concerns that the actual boost to supplies may fall short of official plans.
Countries in the northern hemisphere, such as the United States, usually start their driving seasons in July which has resulted in high demand for gasoline. China, the world’s largest oil importer, is reopening some cities such as Shanghai after prolonged COVID-19 lockdowns.
“Demand is very strong in this cycle and Saudi Arabia can tolerate the increase in official oil prices,” another Asian oil trader said.
On Sunday night, Saudi Aramco also raised the official selling price for purchase for European and Mediterranean buyers, but kept the US spreads unchanged.
MI