Saudi Arabia raised the price of its Arab Light crude oil to Asian buyers in July to the highest level in 6 months after pledging to cut production next month significantly yesterday Sunday.
And Saudi Aramco said in a statement that the official selling price of Arab Light crude oil to Asia for shipment in July rose 45 cents a barrel from June, a premium of three dollars a barrel above the Oman/Dubai average.
The price increase came after Saudi Arabia unexpectedly decided in July on the biggest cut in years by one million barrels a day, bringing the kingdom’s output to 9 million barrels a day the following month from about 10 million in May.
This was in addition to a broader OPEC+ agreement to extend the current voluntary cuts until the end of 2024 from the end of 2023.
A Reuters poll at the end of May showed that the market was expecting a larger drop in the Arab Light price of more than $1 a barrel in July, reflecting lower market prices and tight refining margins.
Higher prices for Saudi oil may encourage refiners to look for cheaper alternative supplies in the region’s spot market or supplies from other fields.
At the same time, Russian oil continues to flow to Asia at steep discounts. According to preliminary estimates by shipping companies, China and India received a record high amount of Russian oil in May.
Saudi Arabia has also increased the price of all raw materials it sells to Asia in July by 45 cents from June levels.
And the price document showed that for the second month in a row, the price of Arab oil, a superior crude oil, was set lower than the price of Arab oil.
Elsewhere, Saudi Arabia raised the official selling price (OSP) of Arab Light oil for northwest Europe by 90 cents in July, at a $3/bbl premium to Brent settlement prices.
At the same time, Saudi Arabia raised the official selling price of its Arab Light oil in the US by 90 cents in July, $7.15 more than Argos sour crude.