SAUDI Arabia hiked the price of its flagship crude to Asia by the most in more than two years as the kingdom responds to surging premiums for Middle Eastern crude and improving refinery margins.
State producer Saudi Aramco raised the price for its Arab Light oil to Asia for March by US$2.40 a barrel, according to a price list seen by Bloomberg. That’s the biggest increase since August 2022. The gain is larger than the US$2 hike expected by traders and refiners surveyed by Bloomberg following significant swings in Middle Eastern crude prices in January.
Tough US sanctions on Russian oil last month sent Asia’s refiners scurrying to buy replacement cargoes. The barrels that are closest in both geography and quality are pumped in the Middle East, leading to a surge in premiums for the region’s crude relative to other international benchmarks.
Refining margins in Asia have also improved in recent weeks, after some processors cut back production, also helping to justify the large increase.
Aramco boosted prices to all regions, with sales of Arab Light to Europe rising by the most since 2020, when a pandemic and historic price war between Russia and Saudi Arabia gripped the oil world. The hikes were much smaller for the US, amid uncertainties over a trade war against Canada and Mexico that could reduce supplies of heavy crude oil.
Oil has fluctuated so far this year as early concern that US sanctions could make it more difficult to ship Russian crude gave way to President Donald Trump’s push for greater supply both at home and from the Organization of the Petroleum Exporting Countries Plus (Opec+) group and his demand-sapping tariffs. He has also called for ramping up economic pressure on Iran. While Brent crude topped US$80 a barrel last month, it has since fallen closer to US$75.
Opec+, led by Saudi Arabia and Russia, is scheduled to start easing some of its production curbs starting April, after deferring it for three times. A monitoring committee this week did not recommend any changes to that plan, suggesting the group will not rush to heed Trump’s call for lower prices. BLOOMBERG
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