Saudi Arabia raises oil prices for Asia, EU, US unexpectedly
The kingdom essentially increased the price for EU buyers by $2 a barrel, and 20 cents for US customers
By News Desk - February 06 2023

(Photo Credit: Reuters)

Saudi Arabia unexpectedly increased oil prices for its customers in Asia, the European Union, and the United States on 6 February.

The decision for the price increase was made despite oil prices dropping by around seven percent this year.

The public petroleum and natural gas company, Saudi Aramco, increased the majority of its crude commodities that it is planning to ship throughout Asia in March, with each barrel having an increased price of $2 above the regional benchmark.

This marks the first notable increase in crude oil prices since September last year. The kingdom essentially increased all prices for EU buyers by $2 a barrel and 20 cents for US customers.

On 4 February, Saudi Arabia’s Energy Minister, Prince Abdulaziz bin Salman, disclosed that Riyadh is cautious about increasing oil production due to a shortage in energy supplies accredited to an economic embargo targeting the Russian energy market and underinvestment in the energy industry.

“I will believe it when I see it and then take action,” Prince Abdulaziz said, referring to a supposed increase in global oil demand.

Since the start of the global energy supply crisis, Washington urged Saudi Arabia and other Gulf states to use their influence and curb global production. However, Saudi Arabia put its weight behind a production cut, citing fears over a global recession.

In November 2022, the kingdom and Kuwait denied that OPEC+ is considering increasing its oil production capacity. According to a report from Al-Monitor, the Saudi government said that the production cut of 2 million barrels a day will be maintained until the end of 2023.

In 2022, the US Senate approved the No Oil Producing and Exporting Cartels Act (NOPEC), which could open OPEC member states and their partners to antitrust lawsuits for “orchestrating supply cuts that raise global crude prices.”

However, at the time, the Saudi energy minister defended the production cut. He dismissed suggestions that the cartel was using energy as a ‘weapon’ by lowering oil output.

“Show me where is the act of belligerence,” he said, adding that energy markets required “guidance without which investment would not happen.”

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