Fuel consumers in Asia should be ready for a price hike in February as Saudi Arabia has raised the pricing for oil sales as well as surge premiums for light grades to the American market. The Middle East country is considered as the world's biggest exporter of crude while OPEC readies to decrease the production to help offset a global oil glut.
Saudi Arabian Oil Co. is known as Saudi Aramco is a government-owned oil company has raised its official appraisal for the Arab Light crude sold to Asia by 60 cents per barrel to 15 cents under the regional benchmark. Based on the median estimated survey conducted by Bloomberg in five refiners and traders, the oil company is already anticipated to increase its Arab Light crude shipment pricing to 50 cents per barrel.
Last year, the price of oil rose to 52 percent, which is its initial year gain in four years as the Oil Petroleum Exporting Countries (OPEC) settled to shrink the output for the first time in eight years. OPEC and the other 11 crude oil producers which include Russia approved to lessen the production by 1.8 million barrels a day this year following the drop in prices of more than half from the 2014 level.
Last month, Saudi Arabia's energy minister, Khalid Al-Falih said that the crude will bounce back as soon as OPEC accomplishes its treaty. The purpose of the mediation of the organization is to balance out the oil market so that prices will rise to stimulate investment in new supplies. Crude oil will balance within the range of $50 and $100 per barrel.
Following the The Wall Street Journal report regarding the Saudi's output statistics, oil prices rocketed and Brent crude becomes optimistic raising the amount to $56.57 per barrel. The rise in Arab Light crude would definitely hit Saudi Aramco's major customers in Japan, South Korea, and especially China.
According to the Edward Bell, a commodities analyst at the Dubai-based Emirates NBD bank, Edward Bell, "Aramco is clearly looking to maximize its revenue as it lowers production by upping prices to its main customer base."
As of the moment, Saudi Aramco has not given any statement regarding the oil price hike slated for the month of February.