Saudi Arabia has raised the prices of its main crude oils for buyers in Asia for next month, after the OPEC+ alliance agreed to extend production cuts until the middle of this year.
Crude oil has been trading in a tight range near $80 a barrel in London since the start of this year, as concerns about falling demand and slowing economic growth outweigh the impact of geopolitical risks linked to war in the Middle East and attacks on ships around the Red Sea.
Saudi Aramco raised the price of its flagship Arab Light crude for Asia by about $1.70 a barrel above the Middle East benchmark, beating expectations in a survey of refiners and traders last week.
Avoiding an oil supply glut
The OPEC+ alliance has extended curbs on crude oil production until at least the end of June, seeking to avoid a global glut while supporting prices. But rising supply from outside the alliance could still meet most of this year’s expected extra demand, making it harder for Saudi Arabia and its partners to return those later-cut barrels to the market. As OPEC’s biggest producer, Saudi Arabia is leading the group’s efforts to prevent a supply glut.
The kingdom also decided to stop increasing production capacity to 13 million barrels per day, and instead stick to the current level of 12 million. This raised speculation about the strength of demand for the kingdom’s oil in the medium term.
