Saudi Arabia lowers oil prices in the US while increases it in Asia

Saudi Arabia increased the price of oil exports to consumers in Asia, signaling the kingdom's optimism about the region's economic growth. The decision comes after the OPEC+ cartel decided to increase daily crude output by more than 2 million barrels between May and July, led by Saudi Arabia and Russia.

According to a tweet, Aramco, the Saudi state energy company, will raise its grades for Asia by 20 to 50 cents per barrel in May. It will lift the primary Arab Light grade for the area by 40 cents per barrel above the benchmark from April to $1.80 per barrel. According to a Bloomberg poll of eight traders and refiners, the company was forecast to raise the grade by 30 cents.

The majority of rates for consumers in northwest Europe will remain unchanged, though Arab Light will be reduced by 20 cents to $2.40 below the benchmark in the area. Most grades to the United States will be reduced by ten cents. For some months, Asian prices have been higher than those in Europe and the United States, owing to the latter two's slower recovery from the coronavirus pandemic.

On Thursday, the Organization of Petroleum Exporting Countries and its partners, including Russia, agreed to boost production by 350,000 barrels per day in May, the same amount in June, and another 450,000 barrels per day in July. Saudi Arabia, the world's biggest oil exporter, will also reverse a unilateral one-million-barrel-per-day cut for the same time span. In May, it will add 250,000 barrels per day, 350,000 barrels in June, and 400,000 barrels in July. The price changes are affecting the different markets differently. Or those who are in very bad economic conditions are the ones that find it very beneficial.

However, it also gives the hand to those, who usually speculate on the market due to the price changes. It is generally known as CFD trading,  and is described as “the purchase and sale of CFDs,” where “CFD” stands for “contract for difference.” CFDs are a kind of derivative commodity that allows you to bet on financial markets like stocks, forex, indices, and commodities without having to buy the underlying assets. Due to the price changes,  oil trading CFDs with brokers became very popular and beneficial at the same time. There are some advantages, that make traders become involved in the oil CFD trading: Spreads are competitive, although there are no trade commissions, due to the quality and importance of crude, it has a lot of liquidity and uncertainty. Moreover, the oil market is open for business five days a week, 23 hours a day. And last but not least, an auto rollover from old to new contracts at no cost.

At the conference, Saudi Energy Minister Prince Abdulaziz bin Salman told his counterparts that OPEC+ should remain vigilant until the global economy has fully recovered. Last May, the cartel began unprecedented supply cuts to support oil prices, and it is still withholding several million barrels a day from the market.

Cutting Oil Prices for Asia as India Battles Virus

As a rise in coronavirus cases crimps demand in India, the world's third-largest crude importer, Saudi Arabia lowered oil prices for consumers in its main market of Asia. Saudi Aramco, the kingdom's state-owned oil company, cut prices for June exports to Africa by 10 to 30 cents a barrel. From $1.80 in May, the main Arab Light grade for Asia was cut to $1.70 a barrel above the benchmark. This is the first drop in the grade's official sale rates since December, indicating volatility in Asian oil markets.

In the industry, price cuts were anticipated. According to a Bloomberg poll of seven traders and refiners, Aramco was forecast to reduce Arab Light's premium by 20 cents. Saudi Oil Minister Prince Abdulaziz bin Salman has advised OPEC+ members to exercise caution as the community eases production cuts put in place last year when the pandemic was wreaking havoc on the global energy markets. From now until July, the 23-nation cartel expects to raise daily production by just over 2 million barrels, starting with 600,000 this month. Even then, demand will be around 5 million barrels a day lower than it was before the pandemic.

Over both types, Aramco increased pricing to the United States by 20 cents a gallon. In the midst of economic development and a drive for mass vaccines, the country is adding jobs. All exports to Northwestern Europe and the Mediterranean were reduced in price, despite mixed outcomes from attempts to boost the economy and ease lockdowns.

Brent oil has risen nearly 35% this year, above $70 a barrel, as vaccine rollouts allow the United States, Europe, and a few other major economies to reopen. On Tuesday, Aramco Chief Executive Officer Amin Nasser expressed optimism about the oil market. Nonetheless, after the beginning of April, the pandemic in India has increasingly intensified. Per day, the nation is registering about 400,000 incidents.

The majority of Middle Eastern countries base their monthly rates on a benchmark. Aramco's OSPs are used as a barometer for the oil markets, and they often set the price pattern in the field. This month, Abu Dhabi released its first OSP focused on a crude futures trade, a move toward establishing its oil as the regional benchmark.

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Steve has been living in Saudi Arabia since 2013 and writing about Saudi rules, regulations, guides, and procedures since then.