Saudi Arabia has raised the price of its flagship crude grade loading for Asia in June, just as the Saudi-led OPEC+ group decided to continue easing the production cuts by adding a larger-than-expected volume to the market next month.
In a sign that the world’s top crude oil exporter expects solid demand in Asia next month, the Kingdom lifted the price of the Arab Light crude grade for June by $0.20 per barrel over May prices to a premium of $1.40 a barrel over the Oman/Dubai average, the benchmark off which Middle Eastern producers price their crude loading for Asia.
During the weekend, the OPEC+ group led by Saudi Arabia and agreed to raise collective output by 411,000 barrels per day (bpd), nearly triple the volume originally scheduled. The move follows a similar surge announced for May and signals a sharp reversal from OPEC+ efforts to defend oil prices.
The OPEC+ producers that are cutting output cited once again “current healthy oil market fundamentals” as the basis for their decision to continue boosting production by larger volumes per month than previously expected.
These eight OPEC+ producers – Saudi Arabia, Russia, Iraq, UAE, Kuwait, Kazakhstan, Algeria, and Oman – will be taking production decisions month by month, with the next meeting planned for June 1 to agree on production levels for July.
Saudi Arabia typically announces around the fifth of each month its crude pricing for the following month and doesn’t comment on price changes. It also sets the tone for the pricing to Asia of the other major oil producers in the Middle East.
Last month, the Saudis slashed their crude prices for May for Asia just ahead of the 410,000-bpd increase planned for May.
Now the world’s biggest crude exporter has slightly raised its official selling price (OSP) for Asia for June for Arab Light. Part of the decision may be due to rising profits for refining Middle Eastern crude, which the Saudis track for gauging demand and market conditions, according to Bloomberg.
By Tsvetana Paraskova for Oilprice.com
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