Algeria raised its oil price for November to the highest in five months after adding Venezuela, fellow OPEC member and holder of the world’s largest crude reserves, to the list of its mostly European customers.
The North African country will sell its Saharan Blend crude at a premium of 70 cents a barrel to Dated Brent, the benchmark for more than half of the world’s oil, according to a price list obtained by Bloomberg. That’s the highest level since June and an increase from 20 cents in October. The first supertanker of Algerian crude arrived in Venezuela on Oct. 25, according to ship tracking data.
“It’s primarily due to its sales to Venezuela” that Algeria has been able to raise premiums, said Amrita Sen, chief oil market analyst at Energy Aspects in London. “Otherwise, demand for light crudes has been super weak.”
The Organization of Petroleum Exporting Countries’ (OPEC) biggest producers, including Saudi Arabia, Iraq and Iran, reportedly cut the official selling prices of their crude exports for November amid a glut of new supply from US shale reservoirs and growing competition for market share in Asia.
Venezuela is importing light oil to dilute its own heavy Orinoco crude and make it more attractive to refiners. The supertanker Carabobo loaded 2 million barrels of Saharan Blend crude in Algeria on Oct. 11 for delivery to the port of Jose in Venezuela. The vessel arrived in Venezuela on Oct. 25, according to ship tracking data. Petroleos de Venezuela SA booked a second tanker last week to load the same grade of Algerian crude, according to three shipping reports obtained by Bloomberg. Blending Venezuela’s heavy crude with imports of lighter oil, instead of using the refined product naphtha, delivers better returns, PDVSA, as the state-run company is known, said in a statement on Oct. 19.
