Saudi Arabia raises oil prices for Asia, US amid strong demand

RIYADH • Saudi Arabia, the world's largest crude exporter, raised pricing on most oil grades for sale to Asia and the United States next month after the nation's energy minister said demand was robust.

State-owned Saudi Arabian Oil Co, known as Saudi Aramco, increased its official selling price for Arab Light crude by 35 US cents a barrel to 60 US cents more than the regional benchmark for sales to Asia, it said in an e-mailed statement.

Oil has rallied about 80 per cent since January, making ministers of the Organisation of Petroleum Exporting Countries (Opec) confident that their two-year strategy of trying to win market share is working.

Opec agreed last Thursday to stick to its policy of unfettered production with ministers united in their optimism that oil markets are improving. European benchmark Brent crude gained as much as 0.9 per cent to US$50.10 a barrel in London trading.

The July pricing sets Aramco's light crude grades at the highest levels for Asia since at least September 2014, before Opec adopted its market share strategy.

"This shows that they're getting more bullish on demand," Mr Robin Mills, chief executive officer at consultant Qamar Energy in Dubai and a non-resident fellow at the Brookings Institution in Doha, said on Sunday by telephone.

"India is showing a lot of strength and we're still seeing very robust demand from China."

Aramco raised pricing on most grades for sale to Asia, leaving only the Extra Light blend unchanged, according to the statement. It raised the premium for Super Light crude by 10 cents, to US$4.05 a barrel more than the benchmark.

Medium crude will sell at a US$1 a barrel discount in July, 30 US cents higher than in June, according to the statement.

The company also increased pricing for US buyers on all grades except Extra Light.

Arab Light crude for US buyers increased by 20 US cents a barrel, to 55 US cents more than the regional benchmark, according to the statement. Aramco deepened discounts for all grades to buyers in Europe, it said in the statement.

"We continue to explore opportunities to strengthen our position as the supplier of choice in all global markets," chief executive officer Amin Nasser said in the statement.

Middle-Eastern producers are competing increasingly with cargoes from Latin America, North Africa and Russia for buyers in Asia, its largest market.

Producers in the Persian 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 and for North America, the marker is the Argus Sour Crude Index.

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A version of this article appeared in the print edition of The Straits Times on June 07, 2016, with the headline 'Saudi Arabia raises oil prices for Asia, US amid strong demand'. Print Edition | Subscribe