Saudi Arabia will be billing more from its upcoming shipments to Asian refineries. Image Credit: Reuters

Riyadh: Saudi Arabia raised oil pricing for customers in its main market of Asia after optimism over coronavirus vaccines caused crude prices to climb to an eight-month high last week. The increase, the biggest in five months, indicates the world's largest oil exporter is confident global energy demand is strong enough to absorb a small boost in output from OPEC+ members next month and that supply will remain tight even with parts of Europe and the US in lockdown.

The Saudis had kept prices low for most of the fourth quarter as virus cases surged, crimping demand for crude. This time, state producer Saudi Aramco raised pricing for Arab Light crude for Asia by 80 cents a barrel to 30 cents above the benchmark. Aramco had been expected to increase pricing for the grade by 65 cents, according to the median estimate in a Bloomberg survey of seven traders and refiners.

Aramco also increased pricing for light crude grades to the Mediterranean region and kept them unchanged for northwest Europe. It lowered pricing for all grades to the US to the lowest since May. Saudi exports to the US have plummeted this year.

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Only Asia is lifting big

Brent crude edged lower on Monday after rising 2.2 per cent last week to $49.25 a barrel, its highest level since early March. It's still down about 26 per cent this year. While Asia is leading the overall global demand recovery, the virus resurgence in Europe and the US continues to be a drag.

The Organization of Petroleum Exporting Countries and allies including Russia agreed last week to add 500,000 barrels a day to crude markets from January. That was less than the increase of 2 million barrels a day the group had agreed to in April, when it struck a deal to cut output by around 10 million barrels daily to prop up prices.