Amid Sky-High Retail Fuel Prices, Saudi Aramco Raises Crude Rates After India Mulls Cutting Imports
Saudi Arabia increased the price of its Arab light crude for the Asian market by USD 0.4/barrel in May, compared to April, and lowered those for the U.S. and European markets by USD 0.1/barrel and USD 0.2/barrel respectively, according to a statement from oil producer Saudi Aramco.
It set the Arab light price for Asia at +USD 1.8/barrel versus Oman/Dubai average, at +USD 0.85/barrel versus ASCI for the U.S. and at – USD2.4/barrel versus ICE Brent for Europe, the company said.
The move comes amid the government asking state refiners to cut Saudi oil imports and, in a throwback to 2014-15, use their “collective clout” to negotiate better contracts. New Delhi’s latest salvo follows a protracted war of words with Riyadh over OPEC-Plus ignoring India’s calls since December to end production cuts, which had spiked prices.
The decision by OPEC+ at the start of last month to leave output unchanged despite a near doubling of oil prices since the start of November sparked an angry exchange of words.
“The decision by OPEC+ has saddened us. It is not good news for India, China, Japan, Korea and other consuming nations,” India’s minister for petroleum told Reuters earlier in March.
“We have asked companies to aggressively look for diversification. We cannot be held hostage to the arbitrary decision of Middle East producers,” an Indian government source said.
In response, Saudi Arabia’s energy minister said India should first use the stocks of crude it bought cheaply during the price slump in 2020.
This was in sharp contrast when officials claimed India’s victory in February when Saudi Aramco had left March prices for Asia unchanged but raised for Europe.
For Indian refiners and much of other Asian buyers, West Asia, which accounts for 60 per cent of India’s oil imports, is hard to beat as a cost-effective source because of proximity, low shipping costs, capacity to supply committed quantities.
Joint procurement is also a nonstarter because of the individual need of each refiner. For the same reasons, the US will not always be a cost-effective source, though it has become the second-largest supplier as India diversifies sources. African producers have issues over meeting their commitments.