Saudi Arabia Crude Oil Pricing: OPEC+ Latest News for Regions

Saudi Arabia increased prices for some crude exports by the most in at least two decades, doubling down on a strategy to bolster the oil market after OPEC+ producers extended historic output cuts over the weekend. The steepest jump in July exports will hit buyers in Asia, state producer Saudi Aramco’s largest market, according to a pricing list from the company on Sunday. The increases erase almost all of the discounts the kingdom made during its price war with Russia earlier this year.

Saudi Arabia is using all the tools at its disposal to turn around the oil market after prices plunged in March and April with the spread of the coronavirus. As the price setter in the Middle East, its increases may be followed by other producers. Unprecedented output cuts led by the Saudis and Russia boosted prices in May, and the OPEC+ group decided Saturday to extend those limits through July. Brent crude has more than doubled since late April, though its still down 35% this year. It rose 1.7% to $43.02 a barrel by 6:55 a.m. in London Monday.

Still, oil refiners’ profits are being squeezed by crude’s rally, and the sharp Saudi hikes are likely to exacerbate that problem. Representatives for refineries from Europe and Asia expressed concern and said the new pricing would crush their margins.

Price War

The month-on-month increase in the official selling price for flagship Arab Light crude to Asia, which accounts for more than half of Saudi oil sales, is the largest in at least 20 years. Aramco raised Asian Arab Light by $6.10 a barrel from June to a premium of 20 cents over the benchmark.

The company increased all grades to Asia by between $5.60 and $7.30. That compares with an expected increase of about $4, according to a Bloomberg survey of eight traders and refiners.

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