Saudi raises pricing for Oct crude to Asia on demand

Bloomberg

Saudi Arabia, the world’s largest crude exporter, raised pricing for October oil sales to Asia and the U.S. in a sign of strengthening demand.
State-owned Saudi Arabian Oil Co., known as Aramco, increased its official selling price for Arab Light crude to Asia by 90 cents a barrel, to 20 cents below the regional benchmark, it said Sunday in an e-mailed statement. The company had been expected to raise Arab Light prices by 50 cents a barrel, to 60 cents less than the benchmark for Asian buyers, according to the median estimate in a Bloomberg survey of seven refiners and traders in the region.
Brent crude has dropped about half from its average price in 2014, when Saudi Arabia led the Organization of Petroleum Exporting Countries to maintain production to drive out higher-cost suppliers. The group decided at a June 2 meeting in Vienna to stick to its policy of unfettered production, with ministers united in their optimism that global oil markets are improving. OPEC will meet again this month in Algiers.

Global Demand
Saudi Arabia won’t boost output to its full 12.5 million barrel-a-day capacity and flood the market, the kingdom’s Energy Minister Khalid Al-Falih said last week. Saudi Arabia isn’t concerned about global demand in spite of a drop in prices and a slower economy, Al-Falih said in an interview with Al-Arabiya television while on a state visit to Asian nations including China and Japan.
Saudi Aramco raised pricing for all other crude grades to Asia by a range of 70 to 95 cents a barrel against the benchmark, while it boosted pricing for all grades to the U.S. by a range of 20 to 30 cents. The company cut all prices to Northwest Europe and the Mediterranean region.
Middle Eastern producers are competing with cargoes from Latin America, North Africa and Russia for buyers in Asia, Saudi Arabia’s largest market. Producers in the Persian Gulf region sell mostly under long-term contracts to refiners. Most of the Gulf’s state oil companies price their crude at a premium or discount to a benchmark. For Asia the benchmark is the average of Oman and Dubai oil grades.

‘Stable Oil Requires Saudi, Russian Cooperation’
Global oil-market stability is impossible without the cooperation of Russia and Saudi Arabia, the world’s biggest crude producers, the kingdom’s influential deputy crown prince said, speaking with Vladimir Putin ahead of an OPEC meeting later this month.
Saudi Arabia hopes to work with Russia for stability in oil markets, Prince Mohammed bin Salman said Sunday in a meeting with the Russian president in Hangzhou, China. World leaders are gathering in China this week for a summit of Group of 20 nations. Russia and Saudi Arabia will meet with other producers in Algeria this month to discuss oil markets.
“Our countries are the two biggest oil producers, that’s why there can’t be a stable policy in the sphere of oil without the participation of Russia and Saudi Arabia,” said Prince Mohammed, a son of the Saudi king. Putin said it is important for the two countries to “maintain a permanent dialogue.”
Crude has gained about 6 percent since the Organization of Petroleum Exporting Countries said last month it will hold informal talks on oil prices and supply during a meeting of the International Energy Forum in Algiers. Producers have been discussing proposals to limit output and prop up crude after a glut cut prices by more than half from their 2014 peak.

Record Output
Brent crude fell last week to $46.83 a barrel after a U.S. government report showed stockpiles in the country increased. OPEC in 2014 adopted a Saudi-led policy allowing members to raise output in an effort to protect market share from higher-cost producers like U.S. shale wells. Output for the group rose to a record in August, a Bloomberg survey showed last week.