Saudi raises oil prices for Asia customers as market tightens

Saudi Arabia increased oil prices for customers in its main market of Asia by more than expected after crude surged above $70 a barrel and the Opec forecast that global demand would heavily outstrip supply over the rest of the year.

State energy firm Saudi Aramco hiked its key Arab Light grade for July shipments to Asia by 20 cents to $1.90 a barrel above a benchmark. Analysts surveyed by Bloomberg were expecting a raise of just 10 cents.

The kingdom sends more than 60 per cent of its exports to Asia, with China, India, South Korea and Japan, being the biggest buyers. Last month, it shipped 6.1 million barrels a day, according to preliminary data compiled by Bloomberg.

Prices for four of Aramco's five Asian grades were increased, with the only drop coming for heavy crude. All grades for Europe were raised, while those for the US were kept the same as for June.

The move is a reverse of Aramco's cut for Asian customers in June, a decision made in early May as new coronavirus cases hammered fuel demand in India.

The Asian country and others such as Japan and

Malaysia are still struggling to slow the pandemic. Still, the Organisation of Petroleum Exporting Countries this week predicted that oil stockpiles will decline rapidly from August as lockdowns ease across major economies and travel picks up.

The Opec and its partners—a 23-nation grouping led by Saudi Arabia and Russia—stuck to a plan to increase production this month and in July. But they refused to say what their plans were beyond those dates.

Brent crude has climbed 38 per cent in 2021 to a two-year high of about $71.20 a barrel. It extended gains this week on Opec's new outlook and because nuclear talks between Iran and world powers stalled. Should the sides reach a deal, the US will probably ease sanctions on Tehran's oil exports.