Saudi Arabia raises the price of Arab Light crude to Asia
Expectations of a decline in Russian crude refining due to the new sanctions
Tuesday – 16 Rajab 1444 AH – 07 February 2023 AD Issue number [
The Aramco logo on an oil tank at a station belonging to the Saudi company (Reuters)
London: «Asharq Al-Awsat»
Saudi Arabia, the world’s largest oil exporter, raised the official selling price of Arab Light crude in March to buyers from Asia, the first increase in 6 months, amid expectations of a recovery in oil demand, especially from China, according to Reuters.
Informed sources reported yesterday (Monday) that the official selling price of Arab Light crude, March loading to Asia, rose by 20 cents per barrel from February, which means a premium of two dollars per barrel over the average of Oman and Dubai crude, contrary to the previous expectations of the market by decreasing it by 30 cents.
“The official selling price is completely unexpected,” said a Singapore-based oil trader, according to Reuters. I think it indicates that Saudi Arabia is optimistic about the demand for oil.”
Fatih Birol, Executive Director of the International Energy Agency, expects that about half of the growth in global oil demand this year will come from China.
Analysts and dealers expected a recovery in Chinese oil demand, starting in March, coinciding with the economic recovery and the end of the peak spread of “Covid-19” in the country.
The official selling price of Arab very light crude was reduced by $1.30 to a premium of $2.25 per barrel over the average of Oman and Dubai crude. As for Arab Medium and Arab Heavy, both rose by 50 cents to a premium of $1.60 per barrel of medium crude, and a discount of $1.75 per barrel of Arab Heavy crude.
Oil prices fell after rising more than a dollar a barrel during yesterday’s trading (Monday), due to the rise of the dollar and amid fears that slowing growth in major economies will lead to a decline in demand, which erased the impact of concerns about supplies.
Brent crude futures for April delivery fell 55 cents, or 0.07 percent, to $79.39 a barrel at 15:42 GMT.
West Texas Intermediate crude futures lost 79 cents, or 1.1 percent, to record $72.60 a barrel.
The strong US jobs data on Friday raised fears that the Federal Reserve (the US central bank) will continue to raise interest rates for at least one more time, which could hurt economic growth and lead to a decline in fuel demand.
The dollar also rose to its highest level in 3 weeks against the euro, yesterday. A rise in the dollar usually reduces demand for oil denominated in the greenback from buyers holding other currencies.
Meanwhile, US bank JP Morgan said that Russian oil refining production could decline by about 300,000 barrels per day as a result of new sanctions on oil flows before recovery to pre-war levels by mid-2023.
Parsley Ong, head of Asia for energy and chemicals research at JPMorgan, told Bloomberg TV that productivity may decline if Russia faces difficulties in changing the path of 500,000 barrels of diesel per day through the last and first quarters. Over time, there will be enough production ships to carry the majority of Russia’s oil.
China’s oil demand will grow in 2023 to 800,000 barrels per day on an annual basis, representing about half of the bank’s forecast for global demand growth.
Ong renewed expectations that the price of a barrel will reach $ 90 in 2023, and expects most of the price increases to occur in the second half of the year, coinciding with the reopening of China.