Saudi Arabia, the world’s largest crude exporter, raised pricing on most of its oil grades for sales to Asia in July after the nation’s oil minister said demand was robust.
State-owned Saudi Arabian Oil Co increased its official selling price for Arab Light crude by 35 cents a barrel to 60 cents more than the regional benchmark for sales to Asia, it said in an e-mailed statement. The company, known as Saudi Aramco, was expected to raise the premium for shipments of Arab Light crude by 40 cents a barrel to 65 cents a barrel more than the benchmark for buyers in Asia, according to the median estimate in a Bloomberg survey of five refiners and traders in the region last week.
Brent crude has dropped about 40% since Saudi Arabia led a 2014 decision by the Organization of Petroleum Exporting Countries to maintain production amid a global supply glut to defend market share and drive out higher-cost producers. Opec agreed on Thursday to stick to its policy of unfettered production with ministers united in their optimism that global oil markets are improving.
Aramco raised pricing on most grades for sale to Asia, leaving only the Extra Light blend unchanged, according to the statement. The company also increased pricing for US buyers on all grades except Extra Light, while it deepened discounts for all grades to buyers in Europe, Aramco said.
Oil has rallied about 80% since January, making oil ministers confident that Opec’s two-year strategy of trying to win market share is working. Saudi Arabia’s Energy Minister Khalid al-Falih, who is also chairman of Saudi Aramco, told reporters in Vienna on Thursday that demand is robust and that non-Opec supply is declining. Crude priced below $50 a barrel doesn’t give producers enough incentive to boost output and prices are on the way up, al-Falih said.


‘Oil giant to keep spare capacity in IPO’


Bloomberg/Kuwait/Vienna




The initial public offering of the world’s largest oil company will not mean an end to a long-time policy of keeping some of its production capacity idle to cushion any disruption in supply, Saudi Arabia’s energy minister said.
“We can demonstrate to investors that it pays over time to have that spare capacity” at Saudi Arabian Oil Co, Khalid al-Falih told reporters in a briefing in Vienna on Thursday. “They are going to have to accept it. It’s part of the package of buying into the lowest cost producer.” The kingdom has a production capacity of 12.5mn bpd and it doesn’t need to expand it beyond that level “any time soon,” he said.
Deputy Crown Prince Mohammed bin Salman said in April that the government will sell less than 5% of the state producer known as Saudi Aramco. The listing, which al-Falih said was targeted for 2018, could turn the world’s biggest oil exporter into the largest publicly traded firm with a value in the trillions of dollars.
After the IPO, “domestic prices, production levels and the capacity will be clearly delineated as a government decision and not a corporate decision,” al-Falih said. The government will continue to own the majority of the company through the Public Investment Fund, and some proceeds from the IPO would also go into the fund, he said.
Saudi Arabia still plans to offer shares in Aramco “at the top, the parent company,” while also studying the possibility of separate or combined IPOs for its joint ventures, al-Falih said. It’s also considering who would be allowed to buy shares in the company, he said.