Saudi Arabia has raised the price of its main oil grade to Asia to a record high premium, as a widening conflict in the Persian Gulf and Iran’s near-closure of the Strait of Hormuz convulse energy markets.
State oil producer Saudi Aramco will increase flagship Arab Light crude prices for May sales to a premium of $19.50 over regional benchmarks for refiners in Asia, according to a price list seen by Bloomberg. Still, the level is less than the $40 a barrel premium anticipated by traders and refiners in a Bloomberg survey.
The gap with market expectations is in part because of a volatile market, and as prices of some Middle Eastern grades dipped in the last week of March, according to traders. Aramco’s oil is also priced for loading in the Persian Gulf port of Ras Tanura, though all of the company’s exports are currently being shipped from the port of Yanbu on the Red Sea coast. Buyers typically incur additional costs to collect those barrels.
US and Israeli strikes against Iran have upended the global energy trade, with the Islamic Republic effectively shutting the vital Strait of Hormuz and choking off its neighbors’ supplies out of the Persian Gulf. Brent crude has jumped by more than 50%, and prices of fuels have spiked.
Saudi Arabia and the United Arab Emirates are the only two Gulf producers with significant export alternatives that circumvent the Hormuz chokepoint. 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 the port of Yanbu, Chief Executive Officer Amin Nasser said in a conference call March 10.
Disclaimer: This report is auto generated from the Bloomberg news service. ThePrint holds no responsibility for its content.
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