Kingdom raises oil prices on demand

07/06/2016 02:19 AST

Saudi Arabia lifted oil pricing for Asian and US customers, a sign the world’s biggest crude exporter is confident that demand is finally eroding a global supply glut.

State-owned Saudi Arabian Oil Co. (Saudi Aramco) raised its official selling price for Arab Light crude in Asia for the second consecutive month, the first back-to-back increase since May 2015, to the highest level since September 2014. Saudi Aramco is the first Gulf country to give July pricing, and major producers including Iraq and Iran typically follow Saudi Arabia. Supply and demand are coming into balance, and oil prices will keep recovering, Saudi Arabia energy minister Khalid Al-Falih told reporters in Vienna on Thursday.

Oil has climbed for the past four months, the longest streak since 2011, as supplies tightened from a decline in US drilling, wildfires in Canada and disruptions in Nigeria. In China, the world’s largest energy consumer, independent refineries are boosting processing rates to a record high, according to industry website Oilchem.net. Consumption in India led the International Energy Agency last month to reduce its estimate of the global oil surplus for the first half.Stronger demand in Asia helps Aramco stay competitive in its biggest regional market even with higher pricing, according to Robin Mills, chief executive officer at consultant Qamar Energy in Dubai. Aramco is “getting more bullish on demand,” Mills said.


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