Saudi Arabia raised the prices of its Arab Light crude oil for Asian buyers in July to the highest level in 6 months, after it pledged yesterday, Sunday, to significantly reduce its production next month.
And Saudi Aramco said in a statement that the official selling price of Arab Light crude oil to Asia for loading in July rose by 45 cents a barrel, compared to June, to become a premium of three dollars a barrel above the Oman / Dubai average.
The price hike came after Saudi Arabia suddenly decided its biggest cut in years by one million barrels per day in July, bringing the kingdom’s production to 9 million barrels per day next month from about 10 million in May.
That was in addition to the broader OPEC+ agreement to extend the current voluntary cuts until the end of 2024 from the end of 2023.
A Reuters survey in late May showed that the market expected a larger cut in the price of Arab Light crude, by more than $1 a barrel, for the month of July, to reflect lower market prices and narrow refining margins.
Higher Saudi oil prices may prompt refiners to look for cheaper alternative supplies from the region’s spot market or shipments from other fields.
At the same time, Russian crude oil continues to flow to Asia at sharp discounts. According to preliminary assessments from ship-tracking companies, in May China and India received record large amounts of Russian crude.
Saudi Arabia also raised the prices of all raw materials it sells to Asia in July by 45 cents from June levels.
And a price document showed that for the second month in a row, the price of Arab Light, Excellent Crude, was set at a lower price than the price of Arab Light.
Elsewhere, Saudi Arabia raised its official selling price (OSP) for Arab Light crude to northwest Europe by 90 cents in July, at a premium of $3 a barrel to Brent settlement prices.
At the same time, Saudi Arabia raised the official selling price of its Arab Light crude to the United States by 90 cents in July, a premium of $7.15 a barrel over sour Argos crude.
