Saudi Arabia Raises Oil Prices To Asia In Sign Of Faith In Demand

2024-08-04 07:00:18

(MENAFN- Live Mint) (Bloomberg) -- Saudi Arabia raised the price of its flagship crude to Asia for the first time in three months, a sign that the kingdom remains confident about demand in the world's largest importer.

State-owned Saudi Aramco raised the September official selling price of Arab Light crude for customers in Asia by 20 cents to $2 a barrel above the regional Oman-Dubai benchmark, according to a price list seen by Bloomberg. Still, it was less than the increase of 50 cents forecast in a Bloomberg survey of five traders and refiners.

Oil demand appears healthy for next month in Asia as refineries come back from maintenance and China's consumption typically peaks in September and October, said traders involved in the survey. The increase had also been expected as a result of moves in Asian oil prices over recent weeks, traders added.

The increase comes days after the Organization of the Petroleum Exporting Countries and its allies signaled no changes to oil supplies, and stuck with tentative plans to start reviving halted production next quarter.

Middle East crude is also looking more attractive to Asian buyers compared with expensive grades from the Atlantic basin. Chinese, Thai and South Korean companies recently boosted their purchases of Abu Dhabi's Murban crude.

Still, there's some concern over a possible supply surplus starting later this year if the OPEC countries, including Saudi Arabia, go through with their plan to begin unwinding some of their voluntary cuts. About 540,000 barrels a day are due to be added over the course of the fourth quarter, which when combined with ample supplies from the US, Guyana, Brazil, and a faltering economic outlook in China, contributes to pressure on benchmark oil prices.

Oil traders and analysts are divided on whether the OPEC members will proceed with their plan, a Bloomberg survey showed last week.

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