Crude oil traded near $62 a barrel in the market as Saudi Arabia is said to give extra crude supplies to its Asian customers. This means they will pay a heavy price for it. Saudi Aramco, Saudi’s official oil company, and the world’s largest oil and gas company by revenue, will sell extra cargoes to buyers in the world’s biggest oil-consuming region for June loading, according sources.
Oil’s rally has gone contrary in the last couple of weeks on speculations that Saudi Arabia and other oil producers will pump more crude to compensate for lost Iranian barrels. Drillers in America have also boosted up output to a record and nationwide supplies climbed to the highest since September 2017. Meanwhile, a weakening in US–China trade relations is affecting a demand outlook that had been improving over the last couple of months.
Warren Patterson, head of commodities strategy at ING Bank NV, said “the move is mostly Saudi-related,”. “It seems to suggest that we will see Saudi production edging higher in the coming months, and shows that they will be there to help meet any shortfall from Iran.”
Brent for July settlement tidied up some earlier losses trading at $70.59 per barrel on the London-based ICE Futures Europe exchange. This was after it fell as much as 76 cents, or 1.1%, earlier. The agreement settled 0.6% higher at $71.24 on Monday.
The global benchmark crude was at a premium of $8.64 to West Texas Intermediate (WTI) for the same month.
Reports have it that Aramco raised its official selling price for June cargoes of its flagship Arab Light crude to the biggest premium to Middle East benchmark prices in 11 months.
Experts say refiners in India, are set to receive extra supplies as much as 200,000 barrels a day from Saudi Arabia. While the extra crude supplies will lessen a squeeze driven by U.S. sanctions on Iran and Venezuela, the refiners face a costly bill.
However, stocks in New York erased an earlier gain to trade 0.7% lower. Also, crude ended 0.5% higher on Monday, a day where prices were subject to the difficult situation between the U.S.-China trade war and refreshed American tensions with Iran.
About Saudi Aramco:
Saudi Aramco is the Saudi Arabian official oil company, and one of the world’s leading producer of energy and chemicals that drive global market and improve the daily lives of people globally. The company is known as the largest oil and gas company in the world by revenue.