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On Sunday, Saudi Arabia, the leading oil exporter globally, raised its August crude prices for buyers in Asia and Europe by over $1 per barrel, anticipating an uptick in domestic crude demand that may result in lower exports, along with expected increased consumption from China.
The state-owned energy company Saudi Aramco adjusted the official selling price for its renowned Arab light crude for August shipments to Asia to $2.20 per barrel above the Oman/Dubai average, marking a four-month peak and a $1 increase compared to July. This adjustment surpassed the projections of a 50-80 cents per barrel rise indicated in a Reuters survey conducted the previous week.
The Gulf nation also raised the prices for all crude varieties sold to refiners in Northwest Europe and the Mediterranean by $1.40 per barrel compared to the month prior.
This price adjustment by Aramco occurred shortly after eight OPEC+ member countries reached an agreement to increase production by 548,000 barrels per day (bpd) in August, surpassing market expectations of 411,000 bpd, thus accelerating the pace of output increases.
The price adjustments reflect a rise in crude demand within Saudi Arabia to satisfy peak summer energy needs, while demand from Chinese refineries remains robust, especially as some facilities had procured lower volumes in recent months, according to two refining sources from Asia.
Analysts predict that Saudi Arabia will utilize more crude oil for energy production this summer, consequently limiting exports.
The official selling prices (OSPs) for supplies to Asia were anticipated to rise for August, as the premium of the cash Dubai benchmark to swaps averaged $1.88 per barrel in June, which is an increase of 61 cents from May’s average.
Last month, growing tensions between Iran and Israel elevated prices for Middle Eastern crude due to concerns surrounding potential supply disruptions, amplifying market volatility.
The premium of cash Dubai to swaps peaked at nearly four-month highs of $3.34 on June 19 before concluding the month at $2.73.
The tables below illustrate the free-on-board prices for August in US dollars.