Aramco raises most Asia oil pricing amid robust demand

Bloomberg

Saudi Arabia, the world’s largest crude exporter, raised pricing on most oil grades for sale to Asia and the U.S. in July after the nation’s
energy minister said demand
was robust.
State-owned Saudi Arabian Oil Co. increased its official selling price for Arab Light crude by 35 cents a barrel to 60 cents more than the regional benchmark for sales to Asia, it said in an e-mailed statement. The company, known as Saudi Aramco, was expected to raise the premium for shipments of Arab Light crude by 40 cents a barrel to 65 cents a barrel more
than the benchmark for buyers in Asia, according to the median estimate in a Bloomberg survey of
five refiners and traders in the region last week.
Oil has rallied about 80 percent since January, making ministers of the Organization of Petroleum Exporting Countries confident that their two-year strategy of trying to win market share is working. OPEC agreed on Thursday to stick to its policy of unfettered production with ministers united in their optimism that oil markets are improving. European benchmark Brent crude gained as much as 0.9 percent to $50.10 a barrel in London trading. The July pricing sets Aramco’s light crude grades at the highest levels for Asia since at least September 2014, before OPEC adopted its market share strategy.
“This shows that they’re getting more bullish on demand,” Robin Mills, chief executive officer at consultant Qamar Energy in Dubai and a non-resident fellow at the Brookings Institution in Doha, said Sunday by phone. “India is showing a lot of strength and we’re still seeing very robust demand from China.”
Aramco raised pricing on most grades for sale to Asia, leaving only the Extra Light blend unchanged, according to the statement. It raised the premium for Super Light crude by 10 cents, to $4.05 a barrel more than the benchmark. Medium crude will sell at a $1 a barrel discount in July, 30 cents higher than in June, according to the statement.
The Dhahran-based company is adding about 250,000 barrels a day of Arab Extra Light crude capacity with the expansion of the Shaybah field in the country’s southeastern Rub Al-Khali desert, it said in its annual review last month.
The increased supply to 1 million barrels a day may explain why
the company kept the grade’s level unchanged at a premium of $2.60
a barrel, Mills said. The improved demand in Asia helps Aramco
to continue competing for market share even with the higher
pricing, he said.
The company also increased pricing for U.S. buyers on all grades except Extra Light. Arab Light crude for U.S. buyers increased by 20 cents a barrel, to 55 cents more than the regional benchmark, according to the statement. Aramco deepened discounts for all grades to buyers in Europe, it said in the statement.
Aramco began supplying 50,000 barrels a day of crude to Polish refiner PKN Orlen SA in May in its first foray into the Baltic market, it said in a statement Wednesday. The company shipped six spot cargoes to Orlen’s refineries in Poland, Lithuania and the Czech Republic to allow the facilities to test the oil, Aramco said. “We continue to explore opportunities to strengthen our position as the supplier of choice in all global markets,” Chief Executive Officer Amin Nasser said in the statement.
Aramco also sold crude on a spot basis to a so-called teapot refinery in China in April as independent fuel-processing plants there begin buying on the open market, rather than getting their supply from China’s state oil companies. Aramco sells its crude mainly through long-term contracts arranged with its customers.
Saudi Arabia pumped 10.27 million barrels a day in April, according to data compiled by Bloomberg. It produced a record average of 10.2 million barrels daily last year, according to the annual review.