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Wed 3 Mar 2010 01:40 AM

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Saudi Arabia to raise oil prices to US in April

Kingdom fell to being the US's 4th biggest crude exporter after being 2nd in 2008.

Saudi Aramco, the world’s largest state owned oil company, raised official selling prices for all crude grades, except heavy, for customers in the U.S. for April and lowered prices on all grades to Europe and most for Asia.

The company increased the formula price of its Arab Light crude to the US the most, raising it by 15 cents a barrel, or 20 percent, to a 60 cent discount off the benchmark Argus Sour Crude Index, Aramco said today in an emailed statement.

It boosted the premium for Extra Light crude to 95 cents above the benchmark, also a 15 cent change.

The formula price of Arab Medium crude to the US rose 10 cents to $2.10 a barrel below the Argus index, while the Arab Heavy crude price fell 15 cents to a $3.30 a barrel discount.

April marks the fourth month Aramco is pricing crude for the US against the ASCI marker, an index of high sulfur oil produced in the Gulf of Mexico. The benchmark replaces 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 Arabia was the fourth biggest crude exporter to the US last year, falling from second place in 2008, according to Energy Information Administration data.

Canada, Mexico and Venezuela all shipped more crude to the US, the data show.

Saudi Aramco lowered the price for all crude grades for April loading for buyers in Asia, except for Arab Super Light.

The Super Light price climbed by 20 cents to a $1.10 a barrel premium over the average of Oman and Dubai grades, the two Gulf benchmarks used by traders in Asia.

The company reduced the formula price for Northwest Europe and the Mediterranean for April liftings. Aramco cut Arab Heavy to Asia by about 50 percent to a $2.50 discount and lowered the same grade to Northwest Europe to a $4.25 discount.

Saudi Arabia, which has joint-venture refinery projects in China, is seeking to strengthen its role as a supplier to Asia as demand from the US and Europe has slipped with the global financial crisis.

The world’s biggest oil exporter agreed this week to raise crude supply to India to 40 million tons a year, or about 770,000 barrels a day, from 25.5 million tons a year, India’s Oil Ministry said.

The exporter has supplied full crude volumes to refiners in Asia since December. It lowered prices on most crude grades for shipment to Asia in February and March.

Saudi Arabia, the largest member of the Organization of Petroleum Exporting Countries and the group’s defacto leader, has led production cuts announced in 2008 to support crude prices.

OPEC next meets March 17 in Vienna to review output quotas and demand forecasts.

The group is unlikely to change quotas at the meeting, oil ministers from member countries including Venezuela and Algeria said last month.

Saudi Arabia was one of five OPEC nations to increase crude production in February, according to Bloomberg estimates.

The Arabian Gulf state pumped 8.25 million barrels a day, 100,000 barrels a day more than in January and almost 200,000 more than its OPEC quota.

OPEC met in Angola on Dec. 22 and agreed to leave official production targets unchanged.

Most members are exceeding their quotas to take advantage of prices that rallied 78 percent last year.

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Chiamanhing 10 years ago

I agree Saudi's oil prices should be higher in USA (considering oil is still under value) and sell them cheaper to Europe and Asia countries.