- Saudi Aramco raised Arab Light crude price to a record $19.50 premium for Asia sales next month
- The Strait of Hormuz closure shifted Saudi oil exports from Ras Tanura to the Red Sea port Yanbu
- Aramco increased all crude grades prices to Asia by $17 per barrel amid Middle East conflict
Saudi Arabia raised the price of its main oil grade to Asia to a record high premium, as a widening conflict in the Middle East and Iran's near-closure of the Strait of Hormuz convulse energy markets.
State oil producer Saudi Aramco increased flagship Arab Light crude for sales next month to a premium of $19.50 over regional benchmarks for refiners in Asia, according to a price list seen by Bloomberg. Still, it was about half the level anticipated in a survey compiled by Bloomberg, with this month particularly hard to gauge given volatile Middle East indexes since the war and a plunge in prices toward the end of the month, traders said.
Photo Credit: Bloomberg
The Dubai and Oman oil benchmarks — used by Saudi Arabia to price its oil — had become increasingly erratic last month as the war created a shortage of the barrels used to assess prices for the region. Refiners in Asia had floated other suggestions for indexing the kingdom's oil, including switching to the global benchmark Brent.
The war that's entered its sixth week has also forced a shift in oil flows as the vital Strait of Hormuz remains largely shut, blocking the usual route for millions of barrels of crude from Saudi Arabia and other major Persian Gulf producers. Riyadh has since shifted most of its shipments to the Red Sea port of Yanbu, which is about 1,200 kilometers from its usual loading port of Ras Tanura on the other side of the country.
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But Saudi Aramco's official list stuck with the usual practice for pricing oil for loading at Ras Tanura, adding another layer of complexity on what buyers would pay for lifting crude. The company asked customers to submit separate requests for how much oil they'd like to receive from either port and said it would only supply the Arab Light grade from Yanbu.
The war and the closure of Hormuz have driven Brent crude up by more than 50%. Aramco raised prices of the Arab Light grade by $17 a barrel for May, the biggest jump on record. It also increased pricing on all of its other crude grades to Asia by the same amount, even if those won't be offered with Hormuz closed. Supplies to other regions such the US and Northwest Europe were also raised to a record premium.
Saudi Arabia and the United Arab Emirates are the only two Gulf producers with significant export alternatives that circumvent Hormuz. Aramco has reached the maximum capacity of 7 million barrels a day on its pipeline running to the Red Sea coast, from where it is exporting close to 5 million barrels a day of crude, or about 70% of its prewar total shipments.
Aramco has shut most production of its Medium and Heavy crude grades and is instead focusing on selling its Light and Extra Light barrels from Yanbu, Chief Executive Officer Amin Nasser said on a conference call March 10.
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(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
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