SINGAPORE: Top crude exporter Saudi Arabia raised prices for the flagship Arab light crude it sells to Asia for a second month in April, to $2.50 a barrel above the Oman/Dubai average, Aramco said on Sunday night.
The price hike - 50 cents a barrel higher than the March official selling prices - was in line with a Reuters survey, as signs of an economic rebound in China raised expectation for a pickup in fuel demand from the world’s top oil importer.
China set a modest economic growth target of around 5% for this year at its annual National People’s Congress.
The world’s second-largest economy posted one of its weakest performances in decades last year when gross domestic product grew by just 3%.
Saudi Arabia set its official selling price (OSP) for Arab Heavy, a medium sour crude containing more sulphur than Arab Light, at 75 cents a barrel above the Oman/Dubai average, up $2.5 a barrel from March.
The market had been expecting a lower price setting, with the Reuters survey predicting an increase of about $1 per barrel.
The price hike came as several new refineries will soon come online, which would lead to supply tightness, especially considering Saudi’s production of Arab Heavy is smaller than other crudes, said a Singapore-based oil trader.
Heavier grades, such as Arab Medium and Arab Heavy, comprise about 30% of Saudi’s total crude oil capacity.
PetroChina is preparing to start its 400,000 barrels-per-day refinery in the southern Chinese province Guangdong, which has been designed to refine heavier grades such as Arab Heavy.
Meanwhile, Kuwait is expected to reduce crude exports, primarily the medium sour Kuwait Export Crude (KEC), and crank up oil product shipments as its Al Zour refinery is set to run at full capacity later this year.
Any cut in exports of KEC, which is of similar quality to Arab Heavy, would tighten supplies and support prices for medium sour crude.
Saudi Arabia raises price for March Arab Light crude to Asia: sources
For other regions, Saudi set its Arab Light OSP to northwest Europe at $1 a barrel above ICE Brent for April, 50 cents a barrel higher than its price for March.
The Arab Light crude OSP for the Mediterranean region was raised by 30 cents to 80 cents a barrel versus ICE Brent for April from the previous month.
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