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Time of India
12-07-2025
- Business
- Time of India
Saudi Arabia hikes oil prices to 4-month high amid China demand surge
The Kingdom raises crude prices for August, reflecting shifting domestic demand and global export strategy/Image: File TL;DR: Saudi Arabia has raised its August Arab Light crude price to Asia by $2.20 per barrel, its highest in four months. This move aligns with peak domestic energy consumption, increased exports to China, and a broader OPEC+ production reset. Refiners in Asia and Europe are facing higher procurement costs amid changing demand patterns.. Long-term consequences include possible pricing pressure, strategic shifts in refinery sourcing, and accelerated energy diversification within Saudi Arabia. A Price Hike With Global Consequences In a move that has caught both traders and analysts off guard, Saudi Aramco raised the official selling price (OSP) of its Arab Light crude to Asia by $2.20 per barrel above the Oman/Dubai average for August deliveries. This represents the steepest premium since April and far exceeds the forecasted range of $0.50 to $0.80 per barrel. Pricing for European buyers has also risen by $1.40 per barrel for Northwest Europe while other grades such as Arab Medium, Heavy, and Extra Light saw increases between $0.90 and $1.30. This pricing decision comes amid a convergence of domestic and international pressures: a surge in local power demand, rising exports to China, and a coordinated OPEC+ move to unwind production cuts that were initially implemented to stabilise pandemic-era oil markets. Why Is Saudi Arabia Raising Prices Now? One of the most immediate drivers behind the price hike is Saudi Arabia's own seasonal energy needs. With air conditioning usage surging across the Kingdom during the intense summer heat, the country has ramped up its crude burn to fuel domestic power stations. Industry sources estimate that Saudi Arabia could be using up to 470,000 barrels per day of crude for electricity generation, especially as fuel oil has become costlier in global markets. Simultaneously, demand from Asia, particularly China is rebounding strongly. In August, Saudi crude exports to China are expected to hit 1.65 million barrels per day, the highest level in over two years. Chinese refiners, particularly state-run Sinopec, have increased orders following maintenance shutdowns in the second quarter. This additional pull from China provides Riyadh with the leverage to set higher price points for its crude. Beyond bilateral trade, the move comes at a time when OPEC+, the alliance of oil-producing nations led by Saudi Arabia and Russia, has decided to raise production by 548,000 barrels per day in August. This is the most significant step yet in a multi-month plan to restore roughly 2.2 million barrels per day of previously withheld output. Absorbing the Shock: Can the Market Handle It? Despite this increase in both price and supply, global oil markets have remained relatively stable. Brent crude futures have hovered around $69–70 per barrel, signalling that demand driven by peak travel season and broader economic recovery is absorbing the additional barrels. Analysts at the International Energy Agency and Saxo Bank suggest that the market remains tight enough in the short term to handle incremental increases without major price collapses. However, this balance could prove fragile. If OPEC+ continues to restore production through September and beyond, it could begin to weigh heavily on prices. Several major investment banks, including Goldman Sachs, have forecasted that Brent could fall into the mid-$60s or even low $60s by the end of 2025 if global demand plateaus or weakens. Implications for Refiners and Global Energy Strategy The pricing decision has strategic implications for refiners in both Asia and Europe. Asian buyers, already operating on thin margins, may look for cost-effective alternatives or adjust refining configurations to accommodate lower-priced crude blends. Some European buyers may explore diversifying away from Gulf supplies toward Atlantic basin producers like Nigeria or Brazil, especially if premiums remain elevated. Saudi Arabia, however, appears willing to accept this trade-off. With spare production capacity estimated at over three million barrels per day, the Kingdom remains the only oil exporter with significant room to manoeuvre. By pricing aggressively, it can crowd out higher-cost competitors particularly in US shale and reassert its dominance in the global supply chain. This aggressive pricing posture also ties into Saudi Arabia's long-term economic transformation plan, Vision 2030. Oil revenues remain the backbone of the country's public spending, and maximising returns from each barrel sold is a fiscal necessity, especially as the government continues to fund megaprojects like NEOM, The Line, and major tourism investments. The International Monetary Fund estimates that Saudi Arabia needs oil prices in the $75–90 range to balance its budget. Looking Ahead: Opportunities and Challenges The long-term consequences of this pricing move will depend on how global markets evolve over the next six to twelve months. A few possibilities stand out: First, if supply continues to rise but demand falters, prices could weaken significantly, putting pressure on both Saudi fiscal health and the broader OPEC+ alliance's unity. Second, US shale producers, many of whom have recently slowed drilling activity due to cost constraints, may see an opening to regain lost ground if prices stabilise above $70. However, they remain highly price-sensitive and unlikely to flood the market as they did in previous years. Third, Saudi Arabia's continued reliance on crude for domestic power generation underlines the need to accelerate its renewable energy goals. The Kingdom has already announced major investments in solar, wind, and nuclear energy to reduce crude burn and meet its climate targets. Successfully implementing these initiatives will allow it to export more oil in the long run and improve environmental sustainability. Finally, rising global oil prices often trigger an acceleration in energy diversification efforts worldwide. For countries heavily reliant on imports, higher prices are a stark reminder of energy insecurity and could push them to fast-track their own transition away from fossil fuels. Verdict: Saudi Arabia's decision to sharply increase crude prices for August marks a pivotal moment in global oil diplomacy. It reflects not only short-term supply and demand dynamics but also a deeper recalibration of the Kingdom's energy and fiscal strategies. Whether this bold move results in sustained revenues or catalyzes new market disruptions will depend on a complex mix of refinery responses, global demand recovery, and policy shifts in energy-importing nations. What is clear, however, is that Saudi Arabia is once again reshaping the rules of the game.
Yahoo
09-07-2025
- Business
- Yahoo
Energy Demand Optimism and Houthi Rebel Attacks on Red Sea Shipping Boost Crude Prices
August WTI crude oil (CLQ25) today is up +0.59 (+0.88%), and August RBOB gasoline (RBQ25) is up +0.0243 (+1.15%). Oil prices today recovered from early losses and rallied to 2-week highs after Saudi Arabia raised prices for its main crude grade for buyers in Asia next month by more than expected. Crude prices added to their gains on elevated tensions in the Middle East after Houthi rebels attacked a ship sailing through the Red Sea, which could attract retaliatory US military strikes on the Houthi rebels. Crude prices initially moved lower today due to a stronger dollar and after OPEC+ raised its crude production level more than expected on Sunday. Markets move fast. Keep up by reading our FREE midday Barchart Brief newsletter for exclusive charts, analysis, and headlines. Crude prices rose today after Saudi Arabia's state-owned producer Aramco raised prices for its Arab Light crude for buyers in Asia next month by $1 a barrel, above expectations of a 65-cent-a-barrel increase. Heightened tensions in the Middle East are supportive for crude prices after Yemen's Houthi rebels claimed responsibility for an attack on a ship sailing through the Red Sea on Sunday, their first strike on merchant shipping this year. Concern about a global oil glut is negative for crude prices. On Sunday, OPEC+ agreed to raise its crude production by 548,000 barrels per day (bpd) beginning August 1, exceeding expectations of a 411,000 bpd increase. Saudi Arabia also stated that additional similar-sized increases in crude output could follow, which is viewed as a strategy to reduce oil prices and penalize overproducing OPEC+ members, such as Kazakhstan and Iraq. OPEC+ is boosting output to reverse the 2-year-long production cut, gradually restoring a total of 2.2 million bpd of production by September 2026. On May 31, OPEC+ agreed to a 411,000 bpd increase in crude production for July, following the same 411,000 bpd hike for June. June crude production rose +360,000 bpd to a 1.5-year high of 28.10 million bpd. Oil prices continue to be undercut by tariff concerns ahead of the July 9 deadline when President Trump says he will implement reciprocal tariffs on imports from any countries that haven't yet reached a trade deal with the Trump administration. An increase in crude oil held worldwide on tankers is bearish for oil prices. Vortexa reported today that crude oil stored on tankers that have been stationary for at least seven days rose by +3.6% w/w to 79.55 million bbl in the week ended July 4. Last Wednesday's EIA report showed that (1) US crude oil inventories as of June 27 were -9.3% below the seasonal 5-year average, (2) gasoline inventories were -0.7% below the seasonal 5-year average, and (3) distillate inventories were -21.0% below the 5-year seasonal average. US crude oil production in the week ending June 27 was unchanged w/w at 13.433 million bpd, modestly below the record high of 13.631 million bpd from the week of December 6. Baker Hughes reported last Thursday that active US oil rigs in the week ending July 4 fell by -7 to a 3.75-year low of 425 rigs. Over the past 2.5 years, the number of US oil rigs has fallen sharply from the 5.25-year high of 627 rigs reported in December 2022. On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Sign in to access your portfolio
The Star
08-07-2025
- Business
- The Star
Oil prices up; strong demand outweighs surprisingly big Opec+ output hike
HOUSTON: Oil prices rose nearly 2% on Monday as signs of strong demand more than offset the impact of a higher-than-expected OPEC+ output hike for August and fresh concerns about the potential impact of U.S. tariffs. Brent crude futures settled up $1.28, or 1.9%, at $69.58. U.S. West Texas Intermediate crude settled up 93 cents or 1.4%, at $67.93. Early in the session, Brent had fallen as low as $67.22 and WTI's session low was $65.40. "The supply picture definitely looks to be elevating, however, the stronger demand is remaining above expectations as well," said Dennis Kissler, senior vice president of trading at BOK Financial. Travel industry statistics released last week showed that a record number of Americans had been set to travel for the Fourth of July holiday by road and air. On Saturday, the Organization of the Petroleum Exporting Countries and allies in OPEC+ agreed to raise production by 548,000 barrels per day in August, exceeding the 411,000-bpd hikes they made for the prior three months. The OPEC+ decision will bring nearly 80% of the 2.2 million-bpd voluntary cuts from eight OPEC producers back into the market, RBC Capital analysts, led by Helima Croft, said in a note. However, the actual output increase has been smaller than planned so far and most of the supply has been from Saudi Arabia, analysts said. In a show of confidence about oil demand, Saudi Arabia on Sunday raised the August price for its flagship Arab Light crude to a four-month high for Asia. Goldman analysts expect OPEC+ to announce a final 550,000-bpd increase for September at the next meeting on August 3. Oil had also come under pressure as U.S. officials flagged a delay regarding when tariffs would begin, but failed to provide details on changes to the rates that will be imposed. Investors are worried that higher tariffs could slow economic activity and oil demand. The U.S. will make several trade announcements in the next 48 hours, Treasury Secretary Scott Bessent said on Monday, adding his inbox was full of last-ditch offers from countries to clinch a tariff deal before a July 9 deadline. "Although U.S. trade policy is still unfolding, the U.S. is extending deadlines and backing away from punitive tariffs, helping to lift some of the demand gloom in place since April," said Jeffrey McGee, managing director of advisory firm Makai Marine Advisors. Meanwhile, Yemen's Iran-aligned Houthis said on Monday a cargo ship they struck with gunfire, rockets and explosive-laden remote-controlled boats had sunk in the Red Sea, after their first known attack on the high seas this year. Israeli Prime Minister Benjamin Netanyahu was due to meet with Trump at the White House on Monday, while Israeli officials hold indirect talks with Hamas aimed at reaching a U.S.-brokered Gaza ceasefire and hostage-release deal. Iranian President Masoud Pezeshkian said he believes Iran can resolve its differences with the U.S. through dialogue, but trust would be an issue after U.S. and Israeli attacks on his country, according to an interview released on Monday. - Reuters
Business Recorder
08-07-2025
- Business
- Business Recorder
Most Gulf markets gain on US trade progress
DUBAI: Most Gulf equities ended higher on Monday as US President Donald Trump signalled progress on multiple trade agreements and announced extended tariff reprieves for several countries. The White House is close to finalising several trade agreements in the coming days and will notify other countries of higher tariffs by July 9, with the new rates effective August 1, Trump said on Sunday. Saudi Arabia's benchmark index rose 0.3%, helped by a 0.8% gain in oil giant Saudi Aramco. Oil shrugged off the impact of OPEC+ hiking output more than expected for August as well as concerns about the potential impact of US tariffs, with prices mostly reversing early losses as a tight physical market lent support. In a show of confidence in oil demand, Saudi Arabia on Sunday raised the August price for its flagship Arab Light crude to a four-month high for Asia. The uncertainty surrounding oil prices, especially with OPEC+ gradually increasing production, remains a key risk for the Saudi market, said Joseph Dahrieh, managing principal at Tickmill. 'However, the market could find support as Saudi Arabia expands its share in the oil market,' he said. Dubai's benchmark index gained 0.9%, hitting a 17-year high, driven by financial shares. Emirates NBD jumped 2.3%, while Dubai Islamic Bank rose 1%. According to Dahrieh, the Dubai stock market's strong fundamentals suggest potential for further growth, while US trade policy risks could continue to weigh on sentiment.
New Straits Times
08-07-2025
- Business
- New Straits Times
Oil prices up, strong demand outweighs surprisingly big OPEC+ output hike
HOUSTON: Oil prices rose nearly 2 per cent on Monday as signs of strong demand more than offset the impact of a higher-than-expected OPEC+ output hike for August and fresh concerns about the potential impact of US tariffs. Brent crude futures settled up US$1.28, or 1.9 per cent, at US$69.58. US West Texas Intermediate crude settled up 93 cents or 1.4 per cent, at US$67.93. Early in the session, Brent had fallen as low as US$67.22 and WTI's session low was US$65.40. "The supply picture definitely looks to be elevating, however, the stronger demand is remaining above expectations as well," said Dennis Kissler, senior vice president of trading at BOK Financial. Travel industry statistics released last week showed that a record number of Americans had been set to travel for the Fourth of July holiday by road and air. On Saturday, the Organization of the Petroleum Exporting Countries and allies in OPEC+ agreed to raise production by 548,000 barrels per day in August, exceeding the 411,000-bpd hikes they made for the prior three months. The OPEC+ decision will bring nearly 80 per cent of the 2.2 million-bpd voluntary cuts from eight OPEC producers back into the market, RBC Capital analysts, led by Helima Croft, said in a note. However, the actual output increase has been smaller than planned so far and most of the supply has been from Saudi Arabia, analysts said. In a show of confidence about oil demand, Saudi Arabia on Sunday raised the August price for its flagship Arab Light crude to a four-month high for Asia. Goldman analysts expect OPEC+ to announce a final 550,000-bpd increase for September at the next meeting on August 3. Oil had also come under pressure as US officials flagged a delay regarding when tariffs would begin, but failed to provide details on changes to the rates that will be imposed. Investors are worried that higher tariffs could slow economic activity and oil demand. The US will make several trade announcements in the next 48 hours, Treasury Secretary Scott Bessent said on Monday, adding his inbox was full of last-ditch offers from countries to clinch a tariff deal before a July 9 deadline. "Although US trade policy is still unfolding, the US is extending deadlines and backing away from punitive tariffs, helping to lift some of the demand gloom in place since April," said Jeffrey McGee, managing director of advisory firm Makai Marine Advisors. Meanwhile, Yemen's Iran-aligned Houthis said on Monday a cargo ship they struck with gunfire, rockets and explosive-laden remote-controlled boats had sunk in the Red Sea, after their first known attack on the high seas this year. Israeli Prime Minister Benjamin Netanyahu was due to meet with Trump at the White House on Monday, while Israeli officials hold indirect talks with Hamas aimed at reaching a US-brokered Gaza ceasefire and hostage-release deal. Iranian President Masoud Pezeshkian said he believes Iran can resolve its differences with the US through dialogue, but trust would be an issue after US and Israeli attacks on his country, according to an interview released on Monday.
