09
2023
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02
Optimistic about the recovery of oil demand, Saudi Arabia unexpectedly raised the price of crude oil exported to Asia
On Monday (February 6th) local time, Saudi Arabia unexpectedly raised its flagship crude oil price for Asian buyers, as the market expected a recovery in oil demand, especially from China.
Saudi Aramco, a state-owned oil company controlled by the Saudi government, announced that the official selling price (OSP) of Arab light crude oil shipped to Asia in March was increased by 20 cents per barrel compared to February, an increase of $2 per barrel compared to the average price in Dubai/Oman, while the market had previously predicted a 30 cent decrease.
As the world's largest oil exporter, approximately 60% of Saudi Arabia's crude oil exports to Asia are sold through long-term contracts, and its pricing is reviewed monthly. China, Japan, South Korea, and India are all big buyers.
In addition, Saudi Aramco on Monday increased the OSP of Arab light crude oil shipped to Northwestern Europe in March by $2 per barrel, and increased the OSP of Arab light crude oil for American buyers by 30 cents per barrel.
This is the first time Saudi Arabia has raised its OSP for Arab light crude oil to Asia since September last year. Oil traders pointed out that Saudi Arabia's price increase was very unexpected, indicating that the country is optimistic about oil demand.
Fatih Birol, Executive Director of the International Energy Agency (IEA), predicts that about half of the global oil demand growth this year will come from China. Analysts and traders predict that China's oil demand will rebound from March.
Goldman Sachs predicts that as China reopens, Brent crude oil futures, the global oil price benchmark, will rebound from $80 per barrel to above $100 per barrel in the third quarter. Morgan Stanley also has similar predictions.
Many members of the Organization of the Petroleum Exporting Countries (OPEC) are optimistic about the recovery of oil demand, but Saudi Energy Minister Abdulaziz bin Salman said on Saturday that the country is cautious about increasing oil production capacity.
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