Saudi Arabia’s oil giant Aramco raised the price for all its crude oil grades to all regions for June in a move that analysts see as the start of demand recovery—and this move sent oil prices jumping early on Thursday after the price announcement.
Saudi Arabia’s flagship Arab Light crude grade will be sold in Asia in June at a $5.90 a barrel discount to the Oman/Dubai average. This is a rise in prices by $1.40 a barrel from May, Reuters reported on Thursday, citing a document with the Saudi official selling prices (OSPs) for June it has seen.
For May, the Saudis had set last month the Arab Light price to Asia at a deep $7.30 a barrel discount to the Oman/Dubai benchmark average.
According to a Reuters survey, Asian refiners had not expected the increase in Saudi prices today—they were predicting that the Kingdom would cut the price of its oil again.
Last month, Aramco had announced deeper discounts for customers in Asia for May, for the second month in a row, despite the historic OPEC+ production cut deal.
Saudi Arabia began to deeply discount its oil two months ago, after OPEC’s top producer and its partner in the OPEC+ pact, Russia, broke up the production cut deal and the Saudis waged a price war for market share.
Today’s increase in the price for Saudi crude for June – which generally sets the trend for the pricing for Asia of other Gulf producers such as Kuwait, Iraq, and Iran – was interpreted as a sign that oil demand may have started to pick up.
“The higher prices by Aramco suggest a recovery of demand and a hint that OPEC+ actually started to cut production in their aim to balance the market,” Hans van Cleef, senior energy economist at ABN Amro, told Bloomberg.
