Saudi Arabia is raising the price of crude oil it ships to Asia. The oil-rich kingdom has been selling oil to Asian nations at a discount for much of the past year to keep competitors from snatching market share amid a global oil glut. Starting in May, it will narrow the discount.
The move comes as demand for oil is declining somewhat — and supply is already abundant and possibly growing even larger. Economists warn China, with its weakening economy, won’t offer the same annual boost to oil demand that it has in the past. Meanwhile, Iran could soon add more oil to global supply if a comprehensive nuclear deal is finalized in June.
Saudi Arabia’s decision to raise oil prices in Asia helped lift oil prices on Monday. Brent crude was up 2.18 percent to $56.15 per barrel in London on light trading because of Europe’s Easter Monday holiday. West Texas Intermediate jumped 2.12 percent to $50.18 per barrel in New York Monday morning. Prices had been climbing ahead of last week’s talks between Iran and world powers, but they plunged Thursday after global leaders reached a preliminary agreement that could allow Iran to increase oil exports later this year. U.S. and Brent trading was closed Friday for the pre-Easter holiday.
Not everyone is convinced an Iran deal would have an immediate effect on the global oil supply, or that China — Asia’s largest oil consumer — can maintain the kind of demand that helped soak up some of the excess supply last year.