Saudi Arabia Hikes Prices for Asian Oil Sales

Saudi Arabia hiked official selling prices for all of its oil sales to Asian customers in the month of May after the kingdom led a surprise OPEC+ output cut.

State-owned Saudi Aramco raised its selling price for flagship Arab Light crude to Asia by 30 cents a barrel, boosting prices for a third consecutive month. Traders who were surveyed before the shock OPEC+ decision had expected Arab Light prices to fall by 43 cents a barrel. 

Oil rallied as much as 8.4% on Monday, the most in more than a year, after an unexpected decision by the Organization of Petroleum Exporting Countries and its allies to cut more than 1 million barrels in daily output starting next month. Saudi Arabia, the cartel’s de facto leader along with Russia, agreed to slash production by 500,000 barrels a day. 

The move blindsided the global crude market, prompting many banks to jack up price forecasts, although some bears remain.

Traders and refiners had been eagerly awaiting the release of Saudi official prices since the start of this week on expectations of an OSP hike. Some buyers were also concerned about potential cuts in their cargo liftings from Aramco, or so-called allocations, prompting them to begin speaking with other non-OPEC+ suppliers for replacement or alternative supplies. 

Saudi OSPs for Asia (differentials against benchmark Oman/Dubai pricing):