Saudi Aramco, the world’s leading oil exporter, has announced an increase in crude oil prices for Asian buyers for February, marking the first hike in three months. This follows the extension of OPEC+ production cuts and declining Russian and Iranian oil supplies.
According to a pricing document, Aramco raised the official selling price (OSP) for its flagship Arab Light crude by $0.60, bringing it to $1.50 per barrel above the Oman/Dubai benchmark average. This represents a significant jump from January’s premium of $0.90 per barrel, which had been a four-year low.
The company also increased prices for other crude grades sold to Asia, as well as for buyers in northwest Europe and the Mediterranean, where OSPs rose by $1.30 per barrel across all grades. However, prices for U.S. buyers were reduced by $0.30–$0.40 per barrel.
Reasons Behind the Price Hike
The increase in Arab Light crude for Asia exceeded expectations, with a Reuters survey of six Asian refiners forecasting a rise of $0.20–$0.50. Industry traders attributed the higher-than-expected adjustment to a sharp rebound in spot premiums observed in late December.
Spot premiums for February-loading Middle East grades had recovered from a one-year low in November, driven by uncertainty surrounding Russian and Iranian supplies. The price of Iranian crude sold to China has surged to its highest in years due to new U.S. sanctions, which have tightened shipping capacity and increased logistics costs.
Meanwhile, in India, state refiners like Bharat Petroleum Corp are purchasing more Middle Eastern crude to offset reduced supplies of cheaper Russian oil.
This move reflects the ongoing shifts in global oil markets, with supply constraints and geopolitical factors playing a key role in shaping pricing strategies for major exporters like Saudi Aramco.
Key Points
- Price Increase for Asia:
Saudi Aramco raised the February official selling price (OSP) for Arab Light crude to $1.50 per barrel above the Oman/Dubai benchmark, a $0.60 increase from January. - First Hike in Three Months:
This marks the first price increase for Asian buyers in three months, following OPEC+ extending production cuts. - Regional Price Adjustments:
- Prices for northwest Europe and the Mediterranean rose by $1.30 per barrel for all grades.
- U.S. OSPs were reduced by $0.30–$0.40 per barrel.
- Higher-than-Expected Increase:
The hike in Arab Light crude prices for Asia exceeded market forecasts, attributed to a sharp rebound in spot premiums in late December. - Global Supply Constraints:
- Spot premiums for February-loading Middle East grades rebounded after November lows due to reduced Russian and Iranian oil supplies.
- Iranian crude prices to China surged due to new U.S. sanctions, tightening shipping capacity and logistics.
- Indian refiners are increasing Middle East crude purchases to compensate for lower Russian oil imports.
- Geopolitical Impact:
Geopolitical factors and supply constraints are driving price adjustments, underscoring the volatility of global oil markets.
