The world’s top crude exporter Saudi Arabia signaled over the weekend it sees Asia and Europe’s oil demand picking up by raising most prices for crude shipments to the regions for the second month in a row.
State-controlled Saudi energy giant Aramco announced on Sunday it will raise the prices for its flagship Arab Light crude up by 50 cents compared to March to $2.50 a barrel above the regional benchmark – the average price of Oman and Dubai crude oil- in the Middle East.
Arab Heavy, a medium sour crude containing more sulfur than Arab Light, will also see its official selling price raised by $2.50 a barrel from March.
Aramco’s price hike for its biggest market Asia, where it sells around 60% of its crude shipments, is in line with a Bloomberg survey of refiners and traders, which forecast a rise of 55 cents. Aramco’s chief executive officer Amin Nasser told Bloomberg last week that the demand from China is very strong.
As China rapidly recovers from Covid restrictions, it has been ramping up crude purchases so its consumption will be the main driver in the growth of global oil demand this year, according to the International Energy Agency (IEA), which expects the consumption to rise to 101.9 million barrels per day (bpd).
Most of Aramco’s Asia shipments are under long-term contracts, pricing for which is reviewed every month.
The Saudi producer also said that, meanwhile, the prices for North-West Europe and the Mediterranean will increase by as much as $1.30 a barrel – by $0.5 per barrel in Northern Europe and by $0.3 per barrel in Southern Europe – only the prices for Aramco’s US customers will be left unchanged.
With a slowing global economy and higher interest rates countering supply disruptions triggered by Russia’s invasion of Ukraine, Brent crude this year has dipped 0.1% to $85.83 a barrel, falling from around $115 since mid-2022.
On Tuesday, Brent went slightly down to around $85 a barrel while US West Texas Intermediate crude wet below $80 per barrel, also trading lower.