Saudi Arabia, the world’s energy superpower, is likely to raise crude oil prices for Asia by July after the Middle East experienced a sound leap in crude benchmarks, media sources reported on Thursday.
The largest oil exporter from the Middle East could potentially increase commercial selling prices by up to $1 per barrel for Arab Light. The price escalation is the highest since 2014, according to a trade survey.
Sanctions on Venezuela and Iran imposed by U.S. and Russian oil crux have worsened the already soured oil trade in Asia, impelling Russian and the Middle East crude surcharges to a substantial height.
Growing demand for an immediate supply of crude caused to experience a situation where the spot price of oil is higher than the forwarded price. The price increase between the first and the third month of Dubai’s benchmark swelled by nearly $1.0 a barrel.
The spread of the Saudi Arabian price jump relies on whether the country considers poor profit margins for fuel oil and naphtha, trade sources said. It is expected to lead to meagre profit gains for crude oil grades, including Arab Heavy and Arab Extra Light, which have a higher financial outcome.
One of the sources said that the crude market structure is optimistic enough, but it doesn’t have adequate backing from refining margins.
Since the 2003s season, refineries in Thailand, Singapore, and South Korea have decided to slash their production as profit margins collapsed at the lowest level. The official selling price of Saudi crude was reported before the 5th day each month, which forms a price trend for Iraq, Iran, and Kuwait, influencing more than 12 million barrels a day.