(Bloomberg) — Saudi Arabia raised oil prices for customers in all regions as Russia’s invasion of Ukraine continues to reverberate through markets.
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State producer Saudi Aramco increased its Arab Light crude for next month’s shipments to Asia to $9.35 a barrel above the benchmark it uses. That’s a jump of $4.40 a barrel from April, when the key grade was already at a record. The move was roughly in line with a Bloomberg survey of traders and refiners last week.
Oil has soared to more than $100 a barrel in the wake of Moscow’s attack, which has roiled financial markets across the world. Many buyers are avoiding cargoes from Russia, despite them being offered a steep discounts. Flows from the country may be down by between 1 and 3 million barrels a day through the third quarter, according to Vitol Group, the world’s biggest independent crude trader.
Aramco made its decision after OPEC+ on Thursday opted to continue raising output only gradually. The 23-nation group, led by Saudi Arabia and Russia, has resisted calls from major importers including the U.S. to accelerate production increases and bring down global fuel prices.
“It’s a massive increase,” said Giovanni Staunovo, a commodity analyst at UBS Group AG. “Extra volumes from Saudi Arabia will only come at a high price.”
The Saudi hike — likely to set the tone for other Middle Eastern producers such as Iraq and Kuwait — comes despite a spate of virus lockdowns in China, the top oil importer.
Aramco raised other Asian grades by at least $2.70 a barrel, while all U.S. prices were increased by $2.20. U.S. Arab light will jump to a premium of $5.65 a barrel, also a record.
More than 60% of Saudi Arabia’s oil shipments go to Asia, with China, Japan, South Korea and India being the biggest buyers. The kingdom is the world’s biggest crude exporter and produced 10.3 million barrels a day last month.
(Updates from fifth paragraph with quote.)
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