Saudi Arabia Raises Crude Oil Prices

by Warren Seah

Saudi Arabia has announced an increase in the prices of its crude sales for the month of August. As part of its ongoing efforts to cut oil output, the country plans to reduce production by 1 million barrels per day.

Saudi Aramco, also known as Saudi Arabian Oil Co., has raised the prices for its Arab light crude benchmark. Buyers in Europe will see a price increase of $0.80 per barrel, while North American buyers will experience a 10 cent increase. Asian buyers can expect a price hike of $0.20, and those in the Mediterranean region will face a $1.00 increase.

The pricing decisions made by the state oil giant are closely observed as an indication of Saudi Arabia’s outlook on oil demand. When prices are raised, it is typically interpreted as a sign of optimism regarding demand levels.

This latest price adjustment comes after Saudi Arabia announced the continuation of a supply cut introduced in July. Russia also simultaneously reduced its oil production by 500,000 barrels per day.

As a result, buyers in the United States and other parts of North America will pay a premium of $7.25 per barrel for Saudi crude compared to the Argus Sour Crude Index. Meanwhile, Asian buyers will have to bear an additional cost of $3.20 per barrel, based on the average prices of the Oman and Dubai oil benchmarks.

European buyers will pay a premium of $3.80 per barrel over Brent prices, while Mediterranean buyers will face a $3.50 premium.

  • Wall Street Journal

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