Saudi Arabia set the price of its benchmark crude in Asia at the highest level since August 2014, just a few weeks after the trading unit of China’s biggest refiner asked for fewer barrels because of high prices. Saudi Arabian Oil Company, the state producer better known as Saudi Aramco, will sell its Arab Light crude at a premium of $1.90 a barrel to a regional benchmark in June, according to a price list, Bloomberg reported.
Differentials for all grades to Asia were increased month-on-month. Unipec, the trading unit of China’s top refiner Sinopec, had proposed taking 40% less crude from the Middle East country for May in response to an unexpected price increase, according to a senior official at the Chinese company.
“It is a combination of the market strengthening, but also it does suggest that Chinese demand is strong and so they feel like they have got room to raise the price,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts.
“They probably have a much better sense of what is going on with Chinese demand than anybody else.”
Saudi Arabia’s prices are closely watched by traders because they offer clues about where the world’s biggest exporter sees refining margins and other key global market indicators.
They are also a key yardstick for other Middle East producers. All prices to Europe were lowered. The market is waiting to see whether US President Donald Trump will stiffen sanctions against Iran, a measure that could upend trade flows.
Unipec’s proposal to receive lower volumes was agreed to by Saudi Aramco, according to the Chinese official.
Add new comment
Read our comment policy before posting your viewpoints