Saudi Arabia raises oil prices amid signs of growing demand

Kingdom increases rates for sales to Asia and the United States more than anticipated as Prince Mohammed enters talks with Russia's Vladimir Putin.

Saudi Arabia's Prince Muhammad bin Salman says the kingdom and Russia should work together over oil. Nicolas Asfonri / Reuters

Saudi Arabia, the world’s largest crude exporter, has raised pricing for October oil sales to Asia and the United States in a sign of strengthening demand.

The state-owned Aramco increased its official selling price for Arab Light crude to Asia by 90 cents a barrel, to 20 cents below the regional benchmark, it said on Sunday. The company had been expected to raise Arab Light prices by 50 cents a barrel, to 60 cents less than the benchmark for Asian buyers, according to the median estimate in a Bloomberg survey of seven refiners and traders in the region.

Brent crude has dropped about half from its average price in 2014, when Saudi Arabia led Opec to maintain production to drive out higher-cost suppliers. The group decided at a June 2 meeting in Vienna to stick to its policy of unfettered production, with ministers united in their optimism that global oil markets are improving. Opec will meet again this month in Algiers.

Saudi Arabia will not boost output to its full 12.5 million barrel-a-day capacity and flood the market, the kingdom’s energy minister Khalid Al Falih said last week. Saudi Arabia is not concerned about global demand in spite of a drop in prices and a slower economy, he said while on a state visit to Asian nations including China and Japan.

Saudi Aramco raised pricing for all other crude grades to Asia by a range of 70 to 95 cents a barrel against the benchmark, while it boosted pricing for all grades to the US by a range of 20 to 30 cents. The company cut all prices to north-west Europe and the Mediterranean region.

Global oil-market stability is impossible without the cooperation of Russia and Saudi Arabia, said Prince Mohammed bin Salman.

Saudi Arabia hopes to work with Russia for stability in oil markets, Prince Mohammed said Sunday in a meeting with the Russian president in Hangzhou, China. World leaders are gathering in China this week for a summit of Group of 20 nations. Russia and Saudi Arabia will meet with other producers in Algeria this month to discuss oil markets.

“Our countries are the two biggest oil producers, that’s why there can’t be a stable policy in the sphere of oil without the participation of Russia and Saudi Arabia,” said Prince Mohammed. Mr Putin said it is important for the two countries to “maintain a permanent dialogue”.

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