Saudi Arabia’s government has taken some steps. It raised oil prices for Asian countries. Officials from the kingdom believe this is a necessary move given the current situation.
According to Bloomberg, Saudi Arabia increased oil prices for its Asian buyers due to growing market volatility, spurred by the escalating Middle Eastern conflict. The state oil company, Saudi Aramco, hiked the price of its flagship Arab Light crude by 90 cents, pushing the premium up to $2.20 per barrel for Asian buyers. Experts had expected a more modest increase of 65 cents, but Saudi Aramco surprised them. Meanwhile, the company reduced oil prices for the United States and Europe.
Let’s not forget that oil prices skyrocketed in early October when Iran launched missile strikes on Israel in retaliation for devastating attacks in Lebanon. As a result, Brent crude surged by more than 8% as markets anticipated a potential Israeli response.
On October 7th, December Brent futures were trading at $77.70 per barrel, slightly retreating from their late August peaks. On October 4th, the price stood at $79.30 per barrel.
The current geopolitical situation has not significantly impacted the hydrocarbon market. In 2024, various regional conflicts failed to cause supply disruptions. Consequently, market players are now more focused on the growing concerns over weak oil demand. Moreover, China’s oil consumption has dropped considerably. In this context, experts fear the global market might be left with an oil surplus.
OPEC+ has also fueled the situation by delaying a planned production increase by two months, now set to begin in December 2024. Analysts predict that the alliance will not stick to its previous plan to reverse production cuts in October and November. Given the circumstances, some analysts believe Saudi Arabia’s exports could remain below 6 million barrels per day, as it has been for the past four months.
