Latest news with #ArabMedium


Time of India
12-07-2025
- Business
- Time of India
Saudi Arabia hikes oil prices to 4-month high amid China demand surge
The Kingdom raises crude prices for August, reflecting shifting domestic demand and global export strategy/Image: File TL;DR: Saudi Arabia has raised its August Arab Light crude price to Asia by $2.20 per barrel, its highest in four months. This move aligns with peak domestic energy consumption, increased exports to China, and a broader OPEC+ production reset. Refiners in Asia and Europe are facing higher procurement costs amid changing demand patterns.. Long-term consequences include possible pricing pressure, strategic shifts in refinery sourcing, and accelerated energy diversification within Saudi Arabia. A Price Hike With Global Consequences In a move that has caught both traders and analysts off guard, Saudi Aramco raised the official selling price (OSP) of its Arab Light crude to Asia by $2.20 per barrel above the Oman/Dubai average for August deliveries. This represents the steepest premium since April and far exceeds the forecasted range of $0.50 to $0.80 per barrel. Pricing for European buyers has also risen by $1.40 per barrel for Northwest Europe while other grades such as Arab Medium, Heavy, and Extra Light saw increases between $0.90 and $1.30. This pricing decision comes amid a convergence of domestic and international pressures: a surge in local power demand, rising exports to China, and a coordinated OPEC+ move to unwind production cuts that were initially implemented to stabilise pandemic-era oil markets. Why Is Saudi Arabia Raising Prices Now? One of the most immediate drivers behind the price hike is Saudi Arabia's own seasonal energy needs. With air conditioning usage surging across the Kingdom during the intense summer heat, the country has ramped up its crude burn to fuel domestic power stations. Industry sources estimate that Saudi Arabia could be using up to 470,000 barrels per day of crude for electricity generation, especially as fuel oil has become costlier in global markets. Simultaneously, demand from Asia, particularly China is rebounding strongly. In August, Saudi crude exports to China are expected to hit 1.65 million barrels per day, the highest level in over two years. Chinese refiners, particularly state-run Sinopec, have increased orders following maintenance shutdowns in the second quarter. This additional pull from China provides Riyadh with the leverage to set higher price points for its crude. Beyond bilateral trade, the move comes at a time when OPEC+, the alliance of oil-producing nations led by Saudi Arabia and Russia, has decided to raise production by 548,000 barrels per day in August. This is the most significant step yet in a multi-month plan to restore roughly 2.2 million barrels per day of previously withheld output. Absorbing the Shock: Can the Market Handle It? Despite this increase in both price and supply, global oil markets have remained relatively stable. Brent crude futures have hovered around $69–70 per barrel, signalling that demand driven by peak travel season and broader economic recovery is absorbing the additional barrels. Analysts at the International Energy Agency and Saxo Bank suggest that the market remains tight enough in the short term to handle incremental increases without major price collapses. However, this balance could prove fragile. If OPEC+ continues to restore production through September and beyond, it could begin to weigh heavily on prices. Several major investment banks, including Goldman Sachs, have forecasted that Brent could fall into the mid-$60s or even low $60s by the end of 2025 if global demand plateaus or weakens. Implications for Refiners and Global Energy Strategy The pricing decision has strategic implications for refiners in both Asia and Europe. Asian buyers, already operating on thin margins, may look for cost-effective alternatives or adjust refining configurations to accommodate lower-priced crude blends. Some European buyers may explore diversifying away from Gulf supplies toward Atlantic basin producers like Nigeria or Brazil, especially if premiums remain elevated. Saudi Arabia, however, appears willing to accept this trade-off. With spare production capacity estimated at over three million barrels per day, the Kingdom remains the only oil exporter with significant room to manoeuvre. By pricing aggressively, it can crowd out higher-cost competitors particularly in US shale and reassert its dominance in the global supply chain. This aggressive pricing posture also ties into Saudi Arabia's long-term economic transformation plan, Vision 2030. Oil revenues remain the backbone of the country's public spending, and maximising returns from each barrel sold is a fiscal necessity, especially as the government continues to fund megaprojects like NEOM, The Line, and major tourism investments. The International Monetary Fund estimates that Saudi Arabia needs oil prices in the $75–90 range to balance its budget. Looking Ahead: Opportunities and Challenges The long-term consequences of this pricing move will depend on how global markets evolve over the next six to twelve months. A few possibilities stand out: First, if supply continues to rise but demand falters, prices could weaken significantly, putting pressure on both Saudi fiscal health and the broader OPEC+ alliance's unity. Second, US shale producers, many of whom have recently slowed drilling activity due to cost constraints, may see an opening to regain lost ground if prices stabilise above $70. However, they remain highly price-sensitive and unlikely to flood the market as they did in previous years. Third, Saudi Arabia's continued reliance on crude for domestic power generation underlines the need to accelerate its renewable energy goals. The Kingdom has already announced major investments in solar, wind, and nuclear energy to reduce crude burn and meet its climate targets. Successfully implementing these initiatives will allow it to export more oil in the long run and improve environmental sustainability. Finally, rising global oil prices often trigger an acceleration in energy diversification efforts worldwide. For countries heavily reliant on imports, higher prices are a stark reminder of energy insecurity and could push them to fast-track their own transition away from fossil fuels. Verdict: Saudi Arabia's decision to sharply increase crude prices for August marks a pivotal moment in global oil diplomacy. It reflects not only short-term supply and demand dynamics but also a deeper recalibration of the Kingdom's energy and fiscal strategies. Whether this bold move results in sustained revenues or catalyzes new market disruptions will depend on a complex mix of refinery responses, global demand recovery, and policy shifts in energy-importing nations. What is clear, however, is that Saudi Arabia is once again reshaping the rules of the game.


Arab News
05-05-2025
- Business
- Arab News
Saudi Aramco raises June oil prices for Asian markets
RIYADH: Saudi Aramco has increased its official selling price for crude oil destined for Asia in June, ending a two-month streak of price cuts, the company confirmed in an official statement on Sunday. The state-owned oil giant raised the price of its benchmark Arab Light crude by $0.20, setting it at $1.40 per barrel above the average of Oman and Dubai crude prices. The adjustment comes despite persistent downward pressure on global oil markets due to concerns over rising supply and a fragile demand outlook. The move follows Saturday's announcement from the OPEC+ alliance, which agreed to boost oil production for a second consecutive month. The group, which includes both OPEC members and key allies like Russia, plans to increase output by 411,000 barrels per day in June. Market observers are now closely watching the outcome of the next OPEC+ meeting, scheduled for May 5, which will further clarify the group's production strategy heading into summer. Saudi Aramco prices its crude oil across five density-based grades: Super Light (greater than 40), Arab Extra Light (36-40), Arab Light (32-36), Arab Medium (29-32), and Arab Heavy (below 29). The company's monthly pricing decisions impact the cost of around 9 million barrels per day of crude exported to Asia and serve as a pricing benchmark for other major regional producers, including Iran, Kuwait, and Iraq. In the North American market, Aramco set the May OSP for Arab Light at $3.40 per barrel above the Argus Sour Crude Index. Aramco determines its OSPs based on market feedback from refiners and an evaluation of crude oil value changes over the past month, taking into account yields and product prices.


Arab News
06-04-2025
- Business
- Arab News
Saudi Aramco cuts oil prices to Asia to four-month low
SINGAPORE: Saudi Aramco on Sunday lowered its crude oil prices for Asian buyers in May to their lowest in four months. This is the second consecutive month Aramco has lowered its prices. The company also lowered April prices for other grades it sells to Asia by $2.30 per barrel. Aramco cut the May official selling price for flagship Arab Light crude by $2.30 to $1.20 a barrel above the average of Oman and Dubai prices, a pricing document from the producer showed. The company also lowered April prices for other grades it sells to Asia by $2.30 per barrel. Eight OPEC+ countries unexpectedly agreed on Thursday to advance their plan to phase out oil output cuts by increasing output by 411,000 barrels per day in May, a decision that prompted oil prices to extend earlier sharp losses. Prior to the news, Arab Light price for Asia had been expected to fall by $1.80 to $2 in a Reuters survey, tracking the steep declines in benchmark prices in March. Saudi Aramco's crude oil is classified into five grades based on density: Super Light (greater than 40), Arab Extra Light (36-40), Arab Light (32-36), Arab Medium (29-32), and Arab Heavy (below 29). These price changes influence the cost of approximately 9 million barrels per day of crude oil shipped to Asia, setting price benchmarks for other major oil producers such as Iran, Kuwait, and Iraq. Spot premium of Dubai averaged at $1.38 per barrel in March, down from $3.33 per barrel, the average in February following more Russian supply returning to Asia since March.


Arab News
09-03-2025
- Business
- Arab News
Saudi Aramco cuts crude oil prices for Asia
RIYADH: Saudi Aramco has lowered its crude oil prices for Asian buyers in April, marking the first reduction in three months. This price cut aligns with market expectations and follows the decision by OPEC+ to gradually increase oil supply starting this month. According to an official statement, the official selling price for the benchmark Arab Light crude has been reduced by 40 cents, now standing at $3.50 per barrel above the average price of Oman and Dubai crude. This change comes after the OSP for Arab Light hit a 12-month high last month, reaching $3.90 above the Oman and Dubai average. Other grades of Saudi crude also experienced price cuts. The OSP for Arab Extra Light has been lowered to $3.30 per barrel, while Arab Super Light is priced at $4.05 per barrel. Additionally, the price for Arab Medium crude has been reduced to $2.95 per barrel, and Arab Heavy crude now stands at $1.80 per barrel. For North American buyers, Saudi Aramco set the OSP for Arab Light crude at $3.80 per barrel above the Argus Sour Crude Index for March. This price adjustment follows OPEC+'s decision to proceed with a planned increase in oil output by 138,000 barrels per day starting in April. It marks the group's first production increase since 2022. Meanwhile, Russian and Iranian oil exports to China are on the rise, as non-sanctioned tankers take advantage of attractive payoffs, helping to ease supply concerns. Saudi Aramco's crude oil is classified into five grades based on density: Super Light (greater than 40), Arab Extra Light (36-40), Arab Light (32-36), Arab Medium (29-32), and Arab Heavy (below 29). These price changes influence the cost of approximately 9 million barrels per day of crude oil shipped to Asia, setting price benchmarks for other major oil producers such as Iran, Kuwait, and Iraq. Aramco typically announces its crude OSPs around the 5th of each month, setting the tone for the global oil market.


Argaam
07-03-2025
- Business
- Argaam
Saudi Aramco sets Arab Crude OSP for April
Saudi Aramco set April official selling price (OSP) for its Arab Light crude to North America at $3.8 per barrel above the Argus Sour Crude Index (ASCI). The Arab Light price for buyers in West Europe has been set at $3.05 above the ICE Brent, according to a statement to Argaam. The Arab Light crude grade was priced $2.85 above the ICE Brent for Europe and the Mediterranean, while the price for East Asia was set at $3.50 above the average of the Oman and Dubai benchmarks, as shown below: Aramco produces five grades of crude: Super Light, Arab Light, Arab Extra Light, Arab Medium, and Arab Heavy, according to Argaam data. The Arab Super light crude is characterized by a density of more than 40, while the Arab Extra light is characterized by a density ranging between 36 and 40. The Arab Light has a density between 32 and 36, the Arab Medium crude has a density between 29 and 32 degrees, and the Arab Heavy has a density of less than 29 degrees.