Saudi Arabia's state-owned oil company, Aramco, is set to supply full contracted volumes of crude to at least four refiners in North Asia next month, according to sources familiar with the plans. This move signals expectations from the world's largest crude oil exporter that demand in Asia will rebound in the coming months. Earlier this week, Saudi Arabia raised the official selling prices (OSPs) for most of its crude going to Asia in April for the second consecutive month, indicating growing confidence in demand.
The price of the flagship Arab Light is set to sell in April for $0.50 a barrel more than in March, while the price hike for Arab Heavy was even more pronounced, at $2.50 per barrel, moving the crude blend from a discount to the Oman/Dubai average to a premium.
This marks the second consecutive month with higher prices for Saudi crude loading for Asia, with last month's hike for March prices coming as a surprise as it was the first time in six months that Aramco had hiked prices for its crude. The March price hike also came amid falling crude oil prices on international markets, which was what made the move surprising, along with the fact that a month earlier Aramco had reduced prices.
Despite continued concern about the state of the global economy, China is beginning to return to normal operations, eyeing economic growth of 5% this year. While this growth target was at the low end of analyst expectations, signs have started to emerge that China could soon increase crude oil imports after a sluggish start to 2023.
Saudi Arabia's move to supply full crude oil volumes to North Asia in April comes as the country looks to capitalise on the growing demand for oil in the region. The increase in prices for Saudi crude, coupled with China's potential increase in crude oil imports, could signal a rebound in demand for oil in Asia in the coming months.
However, as the world continues to transition towards renewable energy sources, the long-term outlook for oil remains uncertain. Governments around the world are setting ambitious targets to reduce carbon emissions, and the push towards renewable energy is expected to grow. While oil demand may rebound in the short term, the long-term trend is towards a reduction in demand for fossil fuels.
