The Strategist

Saudi Arabia raised oil prices in Asia and the US


06/06/2016 - 14:27



State Oil Company of Saudi Arabia, Saudi Aramco raised its selling prices for almost all varieties of petroleum supplied to Asian countries and the USA. 80%-growth of oil prices since the beginning of the year hinted Riyadh that it will remain the largest exporter in the world, even by raising the raw materials prices.



pixabay
pixabay
Saudi Aramco raised the price for almost all of its oil varieties delivered to Asia and the US. Price of Arab Light soared by 35 cents, and now by about 60 cents exceeds price of Oman and Dubai oil grades (benchmark crudes in Middle East). Super Light grade went up by 10 cents, which $ 4.05 more compared to the regional benchmark crudes. The price remained unchanged only for Extra Light. Purchasing prices for the United States have increased, too: the cost of Light Arab rose to 20 cents, what is 55 more than the regional level.

Europe is the only market for which Saudi Aramco lowered the prices. Further still, the country even offered bigger discounts to its European customers. The step is largely obliged to the struggle for the local market against both Russia and Iran. The latter, having come out from under the sanctions regime, now intends to regain lost positions there.

Riyadh attaches confidence in its actions to rise in prices for oil quotations. Since the beginning of the year, their level went up by 80%. At the same time, Saudi Arabia has not given up on its policy to protect the country’s market share, adopted almost two years ago. Now the production is still at the country's record level of 10.2 million barrels a day. The relatively steady level of demand for raw materials allows the Saudi Arabian authorities to increase selling prices without losing market share.

"All this proves that, given the demand, they will conduct more aggressive policy on the market, - said Robin Mills, CEO of Qamar Energy consulting company. - India has quite a strong performance, and we are still seeing a strong demand from China."

A regular meeting of OPEC was held on June 2. The cartel’s participants once again failed to agree on oil production quotas. Iran is still seeking to increase production. Tehran is ready to consider the complex system of quotas for each of the participating countries, but strongly disagree with an idea of the total production ceiling.

Harmonization of personal allowances for all states would take several months, so adoption of a single solution during a brief meeting in Vienna was impossible. Even Saudi Arabia is already in favor of the cartel restriction of 32 million barrels a day. However, a set of rules oblige OPEC to vote on quotas unanimously, and Iran is clearly not going to join this initiative.

Kuwait and Venezuela were quick to call the meeting positive, however, together with Nigeria, Qatar and Algeria, they failed to achieve their goals. Experts point out that OPEC has to be idle, balancing between desire to maintain market share and keep reasonable oil prices. 

source: bloomberg.com




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