Saudi Aramco has increased the official selling prices of its light crude oil for Asian clients for the first time in three months. For September deliveries, the price of its flagship Arab Light crude will rise by $0.20 per barrel. Despite this increase, the prices for Arab Medium and Arab Heavy crude remain unchanged for Asian customers.
The new price for Arab Light will be set at $2 per barrel above the Oman/Dubai average for the coming month. This adjustment, although less than the 50% increase anticipated by analysts, marks the highest price for the Arab Light blend in two months. The price hike is notable given recent economic reports from China, which suggest a slowdown in oil demand growth. Such a backdrop typically does not favor price increases; however, Aramco’s decision indicates that either the Chinese economic data might not fully reflect the demand situation or that demand in other parts of Asia may be stronger.
Conversely, Aramco has lowered crude prices for other regions, including Europe and the United States, reflecting weaker demand in these markets. Prices for European buyers have been reduced by 2.75%, while those for the U.S. have decreased by 0.75%.
China’s oil demand has recently been a major factor influencing oil prices, with disappointing economic indicators and weaker oil import growth contributing to a generally pessimistic market outlook. Despite this, Aramco’s price adjustment for Asian buyers may temporarily shift market sentiment, even though it follows reports of declining Chinese diesel consumption and a rise in the use of LNG-powered trucks.
The decline in diesel demand is linked to a slowdown in China’s manufacturing sector, which has been struggling with its export-led growth model. According to Zameer Yusof, principal middle distillates analyst at Kpler, this model is no longer sustainable.
Aramco’s decision to increase prices for Asian buyers underscores a belief that Chinese demand remains resilient, despite contradictory data suggesting otherwise.
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