Saudi Arabia has raised the price of its main oil grade to Asia to a record high premium, as a widening conflict in the Middle East — and Iran’s near-closure of the Strait of Hormuz — convulse energy markets.
State-run Saudi Arabian Oil Co (Saudi Aramco) would increase flagship Arab Light crude prices for next month’s sales to a premium of US$19.50 over regional benchmarks for refiners in Asia, according to a price list seen by Bloomberg.
Aramco has reached the maximum capacity of 7 million barrels a day on its pipeline running to the Red Sea coast, from where it is exporting close to 5 million barrels of crude a day, or about 70 percent of its prewar shipments.
Photo: AFP
US and Israeli strikes against Iran have upended global energy trade, with the Islamic republic effectively shutting the vital Strait of Hormuz and choking off its neighbors’ supplies out of the Persian Gulf. Saudi Arabia and the United Arab Emirates are the only two Gulf producers with significant export alternatives that circumvent the chokepoint.
OPEC+ warned after a weekend meeting that damage to energy assets would have a prolonged impact on oil supply even after hostilities end. Members of the producers’ group approved an increase in output quotas — a signal of intent given that flows from the Persian Gulf remain throttled.
Oil prices fluctuated yesterday as traders tracked record Saudi Arabian crude pricing, a reported push for a ceasefire in the Middle East and a fresh ultimatum from US President Donald Trump on Iran if the Strait of Hormuz were not reopened. Global benchmark Brent traded below US$110 a barrel, while West Texas Intermediate was near US$112.
Control of the Strait of Hormuz — which connects the Persian Gulf to wider markets, especially across Asia — remains central to the conflict. Tehran has imposed its authority over the waterway, permitting just a small number of vessels to pass through, including, in recent days, a French container ship and a Japanese-owned tanker, as well as vessels from Malaysia and Pakistan.
However, Iraq has told traders and refiners they can collect crude cargoes as vessels carrying the nation’s oil are now able to transit the Strait of Hormuz thanks to an Iranian exemption, testing buyers’ confidence in the security guarantee.
In a notice sent on Sunday, the Iraqi State Organization for Marketing of Oil said shipments were now “exempt from any potential restrictions.” It asked buyers to submit schedules, including vessel details and volumes requested, adding that all loading terminals, including Basrah, are “fully operational.”
Customers were given 24 hours to respond.
Iran at the weekend said that its neighbor was now free from shipping restrictions around the vital waterway. Tanker Ocean Thunder, carrying 1 million barrels of Iraqi crude, crossed the narrow waterway after the announcement.
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