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Mon 5 Jul 2010 09:33 PM

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Aramco raises August oil prices to NW Europe

Oil company raised the formula price of Arab Heavy grade by 95 cents a barrel.

Aramco raises August oil prices to NW Europe
RAISED PRICES: Saudi Aramco has raised its August official selling prices for all crude grades to customers in Northwest Europe. (Getty Images)

Saudi Aramco, the world’s largest state owned oil company, raised its August official selling prices for all crude grades to customers in Northwest Europe and increased Arab Extra Light prices to the US and Asia.

The company raised the formula price of its Arab Heavy grade to Europe the most, advancing it by 95 cents a barrel to a $3.90 a barrel discount to Brent crude, a person familiar with the pricing decision said today.

Saudi Arabia’s state owned producer set the price for its Extra Light grade for August loadings for US buyers at a premium of $1.45 a barrel to the Argus Sour Crude Index, a 15 cent increase from July cargoes.

It raised Extra Light rates to Asia by the same amount to 80 cents a barrel above the benchmark Dubai assessment published by Platts.

The world’s largest crude exporter shipped more oil to Asia last year as sales to the US and Europe slipped with the global economic slump.

Oil producers like Saudi Arabia publish official prices monthly for buyers with term contracts to reflect shifts in supply and demand for different qualities.

Saudi Arabia was the fourth-biggest crude exporter to the US last year, dropping from second place in 2008, according to Energy Information Administration data. Canada, Mexico and Venezuela all shipped more oil to the US, the data show.

The company’s August discounts for shipments of Arab Light- and Medium grade crudes to the US were unchanged. Arab Heavy will cost 10 cents less than in July, as the discount for US buyers widened to $3.50 a barrel below the Argus index.

For US shipments, August marks the eighth month Aramco is pricing against the ASCI marker, an index of high sulfur oil produced in the Gulf of Mexico.

The benchmark replaced a West Texas Intermediate crude price published by Platts, the energy information division of McGraw Hill Cos. WTI oil, a lighter, more expensive crude grade, also trades as a futures contract on the New York Mercantile Exchange.

Saudi Aramco increased the price of Arab Light crude to Asia by 5 cents from July loadings to a 15 cent a barrel discount to Platts Dubai. It left Arab Medium crude unchanged. Super Light crude declined 15 cents to $1.10 a barrel above the marker. The Arab Heavy discount widened 5 cents to $3 a barrel below the Platts marker.

Arab Heavy, the country’s densest grade, was expected to drop by 35 cents a barrel from the July price, according to the median estimate of a survey of nine refiners from Japan, Taiwan, India, China and South Korea. Arab Light, Aramco’s largest export type, was expected to drop by 10 cents a barrel, the refiners said in a survey last week.

Prices for Arab Extra Light and Arab Light to northwest Europe rose by 75 cents a barrel and Arab Medium advanced 85 cents to a discount of $3.05 a barrel to Brent. Saudi Aramco cut prices on all grades for Mediterranean buyers except for Arab Heavy crude, which it left unchanged.

Crude for August delivery gained percent 0.6 percent on the New York Mercantile Exchange during June to close the month at $75.63 a barrel. Saudi Arabia’s Oil Minister Ali al Naimi said March 30 oil prices in a range of $70 to $80 are “as close to perfect as possible” and he hopes they remain in that range.

Aramco has supplied full crude volumes to refiners in Asia since December. It lowered prices on most crude grades to Asia in February, March, April and July, after raising prices on light grades to the US and Asia for May and June.

Oil exports to Asia increased as China bought on average more than 1 million barrels of Saudi crude a day last year, Aramco said in its annual review last month.

Crude exports to the US slipped to 14 percent of Aramco’s total last year from 20 percent in 2008, while shipments to Asia were 56 percent of the total in 2009, compared with a 52.7 percent share in 2008.

To gain better access to Asian markets, Aramco last month agreed with Japan to use idle crude oil storage on the island of Okinawa. Aramco will be able to store as much as 600,000 kiloliters of crude at the site.

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