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Saudi Arabia raised oil prices for buyers in Asia and the U.S., signaling it sees demand staying strong despite the spread of the omicron variant of the coronavirus.
The move comes days after OPEC and its allies — a 23-nation group led by Saudi Arabia and Russia — surprised traders with a decision to boost crude output.
Saudi Aramco increased January’s prices for all crude grades that will be shipped to Asia and to the U.S., according to a statement from the state producer. The company raised its key Arab Light grade for customers in Asia by 60 cents from December to $3.30 a barrel above a benchmark.
OPEC+ opted on Thursday to proceed with a supply increase for next month, even as new Covid-19 cases threaten to sap demand and with the alliance predicting the oil market will flip from a supply deficit to a surplus in early 2022.
Brent crude is down 15% since late November to just below $70 a barrel, reducing this year’s gain to 35%. The fall is mainly due to the discovery of omicron and the prospect of more barrels coming on to the market from OPEC+ and major importers such as the U.S., who want to lower domestic fuel costs.
While Aramco’s price increase was in line with a Bloomberg survey of traders and refiners in Asia, it suggests bullishness on the part of the company’s management. Chief Executive Officer Amin Nasser said last week he was “very optimistic about demand” and that the market had over-reacted to omicron.
Saudi Arabia sends more than 60% of its crude exports to Asia, with China, South Korea, Japan and India being the biggest buyers. Aramco’s official selling prices, or OSPs, serve as a bellwether for oil markets and often lead the pricing trend in the region. Most Middle Eastern countries set monthly prices as a premium or discount to a benchmark.
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