Saudi Arabia has raised oil prices for Asian buyers to a record high amid a decreasing output of oil from Libya, Nigeria, and other major crude suppliers, Bloomberg reported on Tuesday.
August's official selling price for the flagship Arab Light in Asia was raised by $2.80 a barrel from July's price to $9.30 a barrel, as opposed to $5.65 for the US and $5.30 for Western Europe, according to a Bloomberg survey. The prices of heavy crude for European buyers have reportedly been reduced to $2.60 a barrel compared to $5.30 for Asians.
The decision to raise prices for Asian countries came days after OPEC+ nations, led by Saudi Arabia and Russia, agreed to increase production next month by 648,000 barrels a day. August's OPEC+ production quota for Saudi Arabia is 11.004 million barrels per day, a level it has only achieved twice in the past.
OPEC+ and secondary source data showed that countries like Saudi Arabia, Iraq, and Nigeria, among others, have continued to pump below their output target for months. Members of the group pumped 28.52 million barrels per day (bpd) in June, a Reuters survey found, down 100,000 bpd from May's revised total.
The supply crunch emanates from a fall in output from Libya, as unrest has continued to curb the country's oil output. Nigeria's production is down due to outages and maintenance.
Meanwhile, Asian countries have increased their crude intake in recent months as refiners have seen a big jump in their margin amid rising economic activity.
June tanker data shows that Asian countries, dominated by China and India, prefer discounted Ural, taking more than half of all the crude shipped from Russia.
China, India, Japan, and South Korea purchase around 60 percent of Saudi Arabia's total exports. However, these four Asian countries have flagged OPEC in the past over discriminatory prices.
India discussed the possibility with China of forming an "oil buyers' club" that could negotiate better terms with sellers and get more crude oil from other sources to cut the dominance of the oil bloc.
The idea of forming a bloc to counter OPEC's hegemony was mooted by former Indian Petroleum Minister Dharmendra Pradhan during the International Energy Forum meeting in April 2018 in New Delhi. However, progress has stalled due to tensions between China and its neighbors.
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