Saudi Arabia is reported to have raised oil prices for Asian and European importers. This is confirmed by Bloomberg.
The reason for this unexpected decision is believed to be the collapse of the oil industry in Venezuela . Since a Venezuela n oil terminal in the Bahamas has been arrested, Caracas may well fail to fulfil the oil contracts signed with some Asian and European importers. In particular, Venezuela is expected to fulfil those contracts only to 70%. This means that some other oil exporter will have to make up for this shortage.
According to Saudi Aramco, Saudi Arabia’s biggest state-owned oil company, all of their Asian clients will have to pay for Arab Light oil $0,2/b more and $2,1/b above the Oman Dubai benchmark starting from June. This is the biggest price increase in 4 years.
As for those heavy sorts of Arabian oil that are close to the Venezuela n ones, they are expected to become $0,4-0,7/b more expensive. For instance, for Arab Heavy, this will be the highest price since 2012.
As for European importers, the Saudis are planning to cancel the discount program for them. For North-Western EU states, the Saudi oil cost will increase by $1,6-2,5/b. At the same time, Arab Extra Light is expected to level with Brent oil. South European states will get the Saudi oil for a price $1,2-2,1/b higher than before.
It’s also interesting to note that ConocoPhillips (USA) won a trial with PDVSA (Venezuela ) in the international arbitrage to the amount of 2 billion dollars. That’s basically why the mentioned terminal in the Bahamas was arrested. The thing is that Venezuela used to use it as an oil hub for delivering crude oil to Asia. So, according to the IEA, Venezuela ’s oil production has reached the lowest level over the last 50 years.
