Saudi Arabia raises oil prices for Asia, Europe

Saudi Arabia sounded optimistic about oil demand by unexpectedly raising prices for customers in its main market of Asia, while lifting those for Europe and the US.

The moves came despite crude futures falling about 5%, as rising interest rates weigh on consumption and counter optimism about a rebound in China after the end of coronaviruses lockdowns.

State-controlled Saudi Aramco has increased official selling prices for crude that will be shipped to Asia in March. The Arab Light grade of the company was lifted to $2 a barrel above the regional benchmark, 20 cents more than the price for this month.

It is the first increase for the grade since September and goes against a survey by the Bloomberg of traders and refiners, which predicted a cut of 20 cents.

Bob McNally, president of Rapidan Energy Group and a former White House official, told Bloomberg Television that the Saudis see good demand in Asia. China is likely to be back in business in the second quarter. The kingdom raised all prices for European buyers by $2 a barrel, and most of them for the US by 30 cents.

In recent days, many OPEC members have sounded bullish about China - perhaps the single biggest factor determining oil-price moves this year.

Haitham al-Ghais, the group's secretary-general, said he was more optimistic about China. The head of Kuwait's state energy company said to Bloomberg that consumption in the world's biggest crude importer was already on the rise and that it is not a dead-cat bounce. Goldman Sachs Group Inc., citing low stockpiles and spare capacity, sees Brent rising from $80 a barrel to $80 in the third quarter as China fully reopens its economy. Morgan Stanley has a similar forecast.

Prince Abdulaziz bin Salman, Saudi Arabia's energy minister, said on Saturday that the kingdom will be cautious about raising oil production.

Prince Abdulaziz said when I see it, I will believe it and then take action, and he said that there was higher oil demand in the world.

Saudi Arabia is the world's biggest oil exporter. It sells 60% of its crude shipments to Asia under long-term contracts, the pricing for which is reviewed each month. China, Japan, South Korea and India are the biggest buyers.

Its moves are closely followed by other Persian Gulf producers such as Iraq and Kuwait.

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