Saudi Arabia raised prices for its crude oil for buyers in Asia next month despite OPEC+ announcing another larger-than-expected jump in production for June.
The Saudis and seven other members of the producer group agreed over the weekend to accelerate the unwinding of their output curbs. The increase of 411,000 barrels a day for June is more than three times what the group had earlier indicated and follows a similar jump for this month.
State producer Saudi Aramco increased the price of all of its crude, including the main Arab Light grade, for its biggest buyers in Asia by 20 cents a barrel for June, according to a price list seen by Bloomberg. The company had been expected to raise that pricing by 30 cents a barrel, according to a survey of refiners and traders done before the OPEC+ meeting. It lowered prices for other regions, including Europe and the US.
Next month’s increase for Asia partly rolls back a bigger-than-expected cut for May, and keeps the price for Arab Light crude near the lowest level since the start of this year, when the grade sold at a 90 cent premium.
The price rise comes after profit from refining Middle Eastern crude rose at the end of last month, a period traders and Aramco typically watch for judging the market. Trump has also threatened sanctions on any country buying oil from Iran after the two countries delayed the next round of talks aimed at reaching a deal to limit the Islamic republic’s nuclear program.
Higher OPEC+ output and President Donald Trump’s global trade war have contributed to a nearly 20% slump in benchmark oil prices this year. OPEC+ delegates have attributed the supply surge to Saudi frustration with overproduction by some members. The decline in prices is likely to please Trump, who has called for cheaper oil and is scheduled to visit the Middle East, including Saudi Arabia, middle of this month.
The Saudis have also warned that more crude could be coming to the market if recalcitrant members don’t respect their output pledges, according to delegates.
Still, cheaper oil puts increasing pressure on Saudi Crown Prince Mohammed Bin Salman’s signature Vision 2030 plan to modernize the country’s economy. The state, including investment by its sovereign wealth fund, needs prices above $100 a barrel to finance the planned tourist resorts, job creation and industrial development, according to Bloomberg Economics.
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