Saudi Arabia hikes oil prices for Asia again, betting on booming demand

Saudi Arabia has increased oil prices for Asia for the second consecutive month, signalling growing confidence in global demand even as OPEC+ moves forward with plans to boost supply.

According to a pricing document reviewed by Bloomberg, state-run Saudi Aramco will raise the premium for its Arab Light crude destined for Asia by $1 per barrel, bringing it to $3.20 above the benchmark—its highest since April. Industry expectations, based on a survey of refiners and traders, had predicted a 90-cent increase for this grade.

As the world’s largest oil exporter, Saudi Arabia is taking the lead within OPEC+ in ramping up production to expand its market share. A surge in demand for transport fuels has lifted refining margins, helping the market absorb the additional output.

Saudi Aramco CEO Amin Nasser expressed optimism earlier this week, stating, “The strength of oil market fundamentals is supporting demand for our oil and petroleum products,” during a press call discussing the company’s financial results.

While Asian prices climbed, the kingdom slashed prices for European buyers by $1.30 per barrel—the steepest cut this year. For the US market, prices saw a slight increase.

However, some market watchers anticipate that the upcoming OPEC+ production hikes, scheduled for August and September, could lead to downward pressure on prices later in the year. Financial giants like JPMorgan Chase & Co. and Goldman Sachs Group Inc. forecast a potential decline in prices to around $60 per barrel during the fourth quarter.

On August 3, OPEC+ agreed to raise output by 547,000 barrels per day in September, building on a similar increase already approved for August. Brent crude has hovered near $70 per barrel, as traders evaluate both the impact of higher OPEC+ output and potential US actions targeting Russian oil exports.

By Tamilla Hasanova