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Saudi Aramco raised the official selling price for the crude oil it exports to Asia and Europe for yet another month, with the flagship Arab Light to sell in April for $0.50 more than in March.
The price hike for Arab Heavy was even more pronounced, at $2.50 per barrel, moving the crude blend from a discount to the Oman/Dubai average to a premium.
In a report, Reuters noted that the price hikes come as several new refineries in Saudi Arabia are set to soon begin operating, and this would shrink the amount of crude available for exports.
This is the second consecutive month with higher prices for Saudi crude. Last month’s hike came as a surprise as it was the first time in six months that Aramco had hiked prices for its crude. The March price hike also came amid falling crude oil prices on international markets, which was what made the move surprising, along with the fact that a month ago Aramco had reduced prices.
Yet now, despite continued concern for the state of the global economy, China is beginning to return to normal operation, eyeing economic growth of 5% this year, which has motivated a return of optimism among oil bulls.
Oil prices, meanwhile, started the week with a decline. One reason for this was the fact that analysts had expected China to set itself a higher growth target for the year. Another was the anticipation of a testimony Fed’s chairman Jerome Powell will be delivering to Congress later this week, in which he will signal if there will be further rate hikes this year.
"Crude remains in a tug-of-war between optimism over Chinese reopening and nervousness over a hawkish Fed hurting the U.S. economy," energy analyst Vandana Hari told Reuters.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com