By raising August selling prices, Saudi Arabia continues efforts to control oil markets
After applying the largest price increases in 20 years in July
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- Aramco raises the selling price by $ 1.20 a barrel above the average prices of Oman / Dubai
- The selling price to America increased by $ 1.65 a barrel and 70 cents to northwest Europe
- Saudi Arabia cuts exports to 5.6 million bpd in June to revive markets
After making one of the largest price increases for crude oil exports in twenty years, and raising the official selling prices for July / July, to strengthen its strategy to support the oil market, Saudi Aramco continued this strategy by raising the selling price of its main crude (light Arab crude) to its customers in Asia for a month August, by $ 1 a barrel, compared to July prices.
In the first week of every month, Saudi Aramco publishes official oil sales prices to all buyers around the world. This is a very important event for the oil market, because every other product in the Middle East region will follow suit. The Kingdom contributes 20% of global oil supplies, and 35% of seaborne crude oil exports.
Aramco announced in a statement, that the selling price came an increase of $ 1.20 a barrel above the average prices of Oman / Dubai, and to the United States at $ 1.65 a barrel, above the Argos index of high-sulfur crude.
And increased the official selling price to northwest Europe, to 70 cents a barrel over Brent, on the Intercontinental Exchange.
After Aramco announced its prices, oil prices shifted from red to green, reflecting the impact of the Saudi strategy on the markets.
The biggest price increase
Aramco applied the largest price increase to July exports to Asia, which is the largest regional market for Saudi state oil company Aramco, and oil analyst Wilson Wang predicted in an article he wrote for Energy.
Light Arab crude exported to Asia increased by $ 6.10 per barrel, along with an increase of 20 cents above the record price. And raised the prices of July / July for all species exported to Asia, by between 5,60 and $ 7.60 a barrel.
Generally speaking, the increases in Saudi crude oil remove all price cuts that the Kingdom made during its short price war with Russia.
The sharp price increases show that the Kingdom of Saudi Arabia is using all the tools at its disposal to revive the oil market, after prices plunged into negative territory last April. Restricted oil supplies help repair a market affected by the Coronavirus pandemic.
Unprecedented production cuts by Saudi Arabia and Russia boosted prices in May.
Out of responsibility and keenness to take the lead in efforts to rebalance the oil markets, Saudi Arabia reduced crude exports from domestic plants, by 11% in June , compared to May, as it proceeded to reduce production without its share of 8.49 million barrels. Daily, according to the OPEC + agreement.
5.6 million barrels per day
According to its sources to track production and export traffic, Argos International, a global energy agency, reported that shipments from Ras Tanura, Al Juaima and Yanbu stations fell to just under 5.6 million barrels per day in June.
This decline represents 39% of the total 9.22 million bpd that the kingdom exported last April, when it indicated maintaining market shares, after Russian intransigence caused the collapse of an OPEC + meeting, in early March, without agreeing to extend oil production cuts. To rebalance the markets, after oil demand collapsed, following the outbreak of the new Corona virus.
OPEC +, which includes Russia, agreed to reduce oil production in total, by about 9.7 million barrels per day, or about 10% of global consumption, to face the repercussions of the Corona virus. The standard cuts were scheduled to continue until the end of June, but were extended until July.
Ministers from major OPEC + countries will meet in mid-July, within a committee known as the Joint Ministerial Monitoring Committee, to issue a recommendation on the next level of reduction.
The agreement requires that Saudi Arabia maintain production at 8.49 million barrels per day until August, and 8.99 million barrels per day for the remainder of the year.
But out of responsibility and keenness to take the lead in efforts to rebalance the oil markets, Saudi Arabia, followed by the United Arab Emirates and its allies in the Gulf region, pledged to produce less than their official quotas in June, and Riyadh promised that the maximum production would reach 7.49 million barrels per day.
The pledge to cut production by more than a million barrels per day less than the planned share of Gulf countries in the OPEC + agreement, in a season in which burning domestic crude oil for power generation, Saudi Aramco, cut exports last month.
Gulf producers
As soon as Aramco announced the prices of July, the UAE, Kuwait, Qatar, and Iraq followed suit, and announced increases in their prices . Kuwait raised the official selling prices for crude grades, which it sells to Asian refiners in July.
And set the price of Kuwaiti export crude, at the average Oman crude on the Dubai Energy Exchange, and the prices offered for Dubai crude on Platts, an increase of six dollars from the previous month.
And set the official selling price for light sweet crude for the month of July, at 20 cents a barrel above the average Oman crude on the Dubai Energy Exchange, and the prices offered for Dubai crude on Platts, an increase of $ 6.70 from the previous month.
Qatar Petroleum also set the official selling prices for July, for Qatar Marine crude, at 75 cents a barrel, above the average prices offered for Oman and Dubai crude on Platts, up $ 5.35 a barrel from the previous month. And set the official selling price for Qatar Wild Oil, for the month of July, at 75 cents a barrel above the average for Oman and Dubai crude on Platts, up $ 5.90 a barrel, from the previous month.
In Iraq, the Iraqi Oil Marketing Company (SOMO) announced that the official selling price of Basra Light in July was raised to Asia to $ 1.25 a barrel, above the average Oman / Dubai prices offered from a discount of $ 4.55 a barrel in June.
Sumo said it was decided to price Basra heavy crude for Asia at a discount of $ 0.60 a barrel from the prices of Oman / Dubai offered.
The official selling price for Basra Light, in July, for North and South America markets was set at $ 0.85 a barrel, above the Argos index for high-sulfur materials, up $ 0.55 from the previous month, while the price of Kirkuk crude for the United States increased to $ 1.60 a barrel over Argos.
For Europe, the official selling price of Basra Light in July increased by $ 2.10 a barrel, above Brent’s price from a discount of $ 2.30 a barrel, while the official selling price of Kirkuk crude for the month of July increased to $ 2.65.
In the UAE, Abu Dhabi National Oil Company (ADNOC) set the selling price of its benchmark crude for July, at $ 1 a barrel, above Dubai’s Platts, up $ 5.45 from the previous month, according to Reuters.
ADNOC had set the June price at $ 4.45 a barrel, without Platts Dubai.
SOURCE: attaqa.net
