Saudi Arabia Surprises Markets by Increasing Oil Prices to Asia
Authored by Tsvetana Paraskova via OilPrice.com
On Monday, Saudi Arabia raised the official selling price of its flagship crude going to Asia in March. The hike, which was the first in six months, was due to expectations of a rebound in Chinese demand.
Saudi oil giant Aramco lifted the price of its flagship Arab Light grade to Asia for March loadings by $0.20 per barrel to a premium of $2.00 a barrel over the Dubai/Oman average, despite the fact that oil prices have fallen so far this year.
That’s the first increase in the official selling prices (OSPs) for Asia since September, likely reflecting Saudi expectations that demand in Asia will be rising from the second quarter onwards.
Last month, Saudi Arabia slashed the Arab Light price by $1.45 per barrel, setting the price for February loadings at $1.80 a barrel above the Dubai/Oman benchmark. The premium to the Dubai/Oman average for February is the lowest since November 2021, but it was generally in line with expectations.
For March, however, the increase in Saudi prices came as a surprise to the market.
“The OSP is quite unexpected. I think it indicates that Saudi is bullish on oil demand,” a Singapore-based oil trader told Reuters.
The move was contrary to expectations in a Reuters survey of four refining sources from last week, in which participants said they expected the price of Arab Light to be cut by around $0.30 for March loadings. It’s also against the Bloomberg poll, in which traders and refiners expected a $0.20 cut from Aramco for next month.
For other grades, Aramco cut the price for Arab Extra Light by $1.30 to $2.25 a barrel over the Oman/Dubai benchmark, but raised the OSPs for Arab Medium and Arab Heavy by $0.50.