Copy of 2023-04-05T153114Z_312071833_RC2E80ABMCTV_RTRMADP_3_GLOBAL-OIL-1680773935504
Aramco sells about 60 per cent of its crude shipments to Asia. Image Credit: REUTERS

Riyadh: Saudi Arabia hiked official selling prices for all of its oil sales to Asian customers in the month of May.

State-owned Saudi Aramco raised its selling price for flagship Arab Light crude to Asia by 30 cents a barrel, boosting prices for a third consecutive month. Traders who were surveyed before the shock OPEC+ decision had expected Arab Light prices to fall by 43 cents a barrel.

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Oil rallied as much as 8.4 per cent on Monday, the most in more than a year, after an unexpected decision by the Organization of Petroleum Exporting Countries and its allies to cut more than 1 million barrels in daily output starting next month.

Traders and refiners had been eagerly awaiting the release of Saudi official prices since the start of this week on expectations of an OSP hike. Some buyers were also concerned about potential cuts in their cargo liftings from Aramco, or so-called allocations, prompting them to begin speaking with other non-OPEC+ suppliers for replacement or alternative supplies.

Saudi Aramco can affect and control the overall amount of oil it exports in a given month through the setting of its official prices relative to other competing suppliers, or via the allocation process where it decides how much of each grade it will supply to each customer.

Aramco sells about 60 per cent of its crude shipments to Asia, most of them under long-term contracts, pricing for which is reviewed each month. China, Japan, South Korea and India are the biggest buyers.

The company’s pricing decisions are often followed by other Gulf producers such as Iraq and Kuwait.