Saudi Arabia raised higher-than-expected oil prices for its biggest market in Asia as the region’s main economies ease coronavirus restrictions, boosting demand.
The increase for July shipments resumes a series of hikes that began in February and was only broken when kingdom maker Saudi Aramco cut prices from record levels a month earlier.
Aramco raised its key Arab light crude grade for Asian customers to $6.50 a barrel from $2.10 a barrel in June, which uses the benchmark. According to a Bloomberg survey of refiners and traders, the market was expecting a rise to $1.50.
Aramco also grew all grades for North West Europe and the Mediterranean. There was no change in prices for the second month in a row for US customers.
The kingdom, the world’s biggest oil exporter, raised prices for shipments sold under long-term contracts after futures increased in the wake of Russia’s invasion of Ukraine. This year, crude has climbed more than 50 percent to $ 120 a barrel.
Markets firmed up on reduced inflows from Russia due to US and European sanctions. In addition, Asian countries such as China and Singapore have been easing demand-suppressing lockdowns over the past two or three months.
“In some places there is quite a demand rebound,” Mike Mueller, head of Asia at the Vitol Group, said on a podcast produced by Dubai-based Gulf Intelligence on Sunday. The demand is much higher than the expectations. And try to buy air tickets to Singapore in summer holidays. It’s very difficult.”
OPEC+ on Thursday agreed to accelerate production growth. The 23-nation cartel, led by Saudi Arabia and Russia, said it would add 648,000 barrels to the market each day in July and August, about 50% more than its moves in recent months.
Still, most analysts said the group is unlikely to meet its goals as many members, even those leaving Russia, are struggling to pump in more. Saudi Arabia and the United Arab Emirates are the only OPEC+ nations with significant surplus capacity.
Saudi Arabia sends more than 60% of its crude oil exports to Asia, with China, Japan, South Korea and India being the biggest buyers.