Saudi Aramco has raised the official selling prices of its light crude for Asian clients for the first time in three months. The price for the flagship Arab Light crude for September delivery has been increased by $0.20 per barrel. Despite this adjustment, Aramco has kept the prices for Arab Medium and Arab Heavy crude unchanged for its Asian customers.
The new price for Arab Light will be set at $2 per barrel above the Oman/Dubai average for next month, marking the highest price for this blend in two months. However, the increase is notably less than the 50% rise anticipated by analysts.
This price adjustment is particularly noteworthy given recent economic reports from China, which have suggested weakening oil demand growth. Typically, such an environment would not be conducive to price hikes. Aramco’s decision to raise prices could indicate that the economic data from China may not fully capture the broader demand dynamics or that demand in other parts of Asia remains robust.
In contrast, Aramco has lowered its crude prices for other export destinations, including Europe and the United States, reflecting weaker demand in these regions. Discounts for European destinations have reached 2.75%, while prices for U.S.-bound oil have been reduced by 0.75%.
Chinese oil demand has been a significant factor influencing recent oil price movements, contributing to a generally pessimistic market outlook due to disappointing economic indicators and sluggish oil import growth. Aramco’s price increase for Asian buyers comes amidst reports of declining Chinese diesel consumption, which points to weaker overall fuel demand. The decline in diesel use is attributed to the rise in LNG-powered trucks.
Additionally, China’s slowing fuel demand is linked to a weaker manufacturing sector and the unsustainability of its “export-led” growth model, according to Zameer Yusof, principal middle distillates analyst at Kpler.
Aramco’s decision to raise prices for Asian buyers, despite these mixed signals, underscores the company’s belief in sustained Chinese demand or potential strength in other parts of Asia.
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