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Saudis raise crude oil pricing to Asia on signs of demand growth

State-owned Saudi Arabian Oil Co. narrowed the discount for its Arab Light grade to Asia to the least since December, setting the crude at a discount of 60 cents a barrel to the regional benchmark, the company said in an e-mailed statement. Photo: Bloomberg Premium
State-owned Saudi Arabian Oil Co. narrowed the discount for its Arab Light grade to Asia to the least since December, setting the crude at a discount of 60 cents a barrel to the regional benchmark, the company said in an e-mailed statement. Photo: Bloomberg

The producer cut pricing for May sales of Light crude to the US by 10 cents a barrel and to Northwest Europe by 20 cents

Saudi Arabia, the world’s largest crude exporter, raised pricing for all May sales to Asia, after the country’s oil minister said global demand was improving.

State-owned Saudi Arabian Oil Co. narrowed the discount for its Arab Light grade to Asia to the least since December, setting the crude at a discount of 60 cents a barrel to the regional benchmark, the company said in an e-mailed statement. The May pricing is 30 cents higher than in April. The company known as Saudi Aramco also increased the pricing of the other four grades it ships to Asia.

The producer cut pricing for May sales of Light crude to the US by 10 cents a barrel and to Northwest Europe by 20 cents, according to the statement on Sunday.

Brent, a global oil benchmark, fell almost 50% in the past year as the Saudis and other Opec members chose to protect their market share rather than cut production to boost prices. The Organization of Petroleum Exporting Countries decided on 27 November to keep its output target unchanged in the face of burgeoning supply from areas including North America.

Global crude use is improving, and Saudi Arabia can meet demand from any customer, oil minister Ali al-Naimi said at a conference in Riyadh on 23 March. The kingdom was pumping at a near-record level of about 10 million barrels a day, he said.

Aramco and other Middle Eastern producers cut pricing to Asia this year to compete with cargoes from Latin America, Africa and Russia. Persian Gulf nations sell mostly under long-term contracts to Asian refiners at a premium or discount to the average of regional benchmarks Oman and Dubai crude.

‘Less worried’

“It seems that the Saudis have established a good market share in Asia, and they are less worried by competition from other producers than they used to be early in the year," Essam al-Marzouk, a Kuwait-based analyst and former vice president for Europe at Kuwait Petroleum International, said Sunday in e-mailed comments. “That’s why they are comfortable now with driving their official selling prices up a little bit."

Saudi Arabia must be prepared to defend its position in Asia as Latin American producers supply more crude to the region, he said.

“Asia now has more options to source crude oil supply," Sushant Gupta, head of Asia downstream research at consultants Wood Mackenzie Ltd, said 30 March in an e-mailed statement. Saudi market share in Asia will decline by 2020 if it fails to boost exports to the region, according to Wood Mackenzie. Bloomberg

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