Saudi Arabia's Aramco raises Asia, US oil prices in sign demand seen rising

Saudi Arabia raised oil for prices for buyers in Asia and the US for September in a sign the world’s largest crude exporter sees demand continuing to recover despite a surge in coronavirus cases in some of the world’s main energy importers.

OPEC+, the oil-producers’ group led by the Saudis and Russia, agreed last month to ramp up production over the rest of the year. Most analysts still see the market facing a shortage of barrels amid a global economic recovery from the worst of the pandemic.

Saudi Aramco will increase its key Arab Light grade for Asia by 30 cents from August to $3 a barrel above the state company’s benchmark, according to a statement. That’s slightly less than the 50-cent increase forecast in a Bloomberg survey. Aramco is raising pricing for other grades to the region by between 20 and 60 cents.

Saudi Arabia sends more than 60 per cent of its crude exports to Asia, with China, South Korea, Japan and India the biggest buyers.

Brent crude has dropped 5 per cent this week to just above $72 a barrel on concern about the spread of the delta variant of the coronavirus, particularly in Asia. That could temper buyers’ uptake of Saudi barrels, even with the lower-than-expected increase. Abu Dhabi also increased September pricing for the region.

Still, many analysts and traders see the latest Covid-19 flare-ups as a short-term hit to oil demand. The market has tightened this year — Brent is up around 40 per cent despite falling this week — due to rising consumption and OPEC+ only slowly easing deep supply cuts it started early last year to boost prices.