Informed sources said that Saudi Arabia raised the price of Arab Light crude for buyers in Asia for the third month in a row, after the major producers announced an additional production cut.
The sources added that Saudi Arabia raised the official selling price of Arab Light crude to Asia for loading in May by 30 cents a barrel compared to the April price, to reach $2.8 a barrel above the Oman/Dubai average, according to Reuters.
The price increase is in line with a Reuters survey of sources from Asian refineries, and comes after the decision of the “OPEC +” alliance to cut production, which is expected to reduce supplies from the Middle East.
The OPEC + alliance, which includes the Organization of the Petroleum Exporting Countries (OPEC) and its allies, surprised the market on Sunday by announcing a cut of 1.16 million barrels per day from May until the end of the year.
Saudi Arabia increased its official selling prices for Arab Medium crude by 30 cents and Heavy by 50 cents in May. Arab Medium and Arab Heavy are two types of crude that contain higher levels of sulfur than those found in Arab Light.
The increase in Arab Heavy crude prices follows a larger increase in demand for heavy crude in the region after new refineries designed to process heavy grades, such as PetroChina’s Jiangyin refinery, entered production.
Market participants expected that reducing production from the OPEC + alliance may prompt Asian refineries to seek more supplies from Russia, Africa and the Americas.
