Saudi Arabia, the world’s leading oil exporter and second largest producer, has raised its official selling price (OSP) for July-shipping Arab Light crude to its largest market in Asia by $2.10 a barrel. This is up from June to $6.50 above its standard, as demand and cost for oil and gas remain at unprecedented levels.
The July price hike comes as a surprise, and much higher than the $1.50 a barrel most refiners and traders expected, according to Bloomberg. In addition to increasing crude supplies to Asia, Saudi state oil producer Saudi Aramco has also raised its July/June OSP for its North European and Mediterranean buyers.
If demand continues to increase in Saudi Arabia’s largest export markets, it could eventually have an impact further west to the U.S. But for now, crude price differentials from the kingdom remain unaltered for the United States.
This news comes after rumors began to circulate that President Biden is expected to travel to Saudi Arabia to meet Crown Prince Mohammed Bin Salman and after the OPEC+ cartel announced an agreement to release more crude barrels per day in July and August.
According to a White House source, ABC News is reporting that President Biden is carefully considering a diplomatic visit to Saudi Arabia to meet with members of the Gulf Cooperation Council (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates) and Egypt, Iraq and Jordan.
A meeting with Crown Prince Mohammed Bin Salman would be an attempt to persuade Saudi Arabia to pump more oil to reduce the cost burden every nation is now experiencing. This is something Saudi Arabia has refused to do despite Western pleas to bend its production cap agreement with Russia, according to ABC news.
The two countries have a shaky relationship. President Biden has repeatedly vowed to isolate Saudi Arabia and its crown price after American intelligence found that Mohammed effectively ordered the killing of U.S.-based journalist Jamal Khashoggi in 2018.
According to The Washington Post, while speaking at a Democratic presidential candidates debate in 2019, Biden said of Saudi Arabia, “We were going to in fact make them pay the price, and make them in fact the pariah that they are.”
The Post reported that while Biden hasn’t backed down from his vow to make Saudi Arabia “a pariah,” he is shifting his focus on human rights and peace in the Middle East, stating “I’m not going to change my view on human rights, but as president of the United States, my job is to bring peace. If I can, peace if I can. And that’s what I’m going to try to do.”
The Saudi Arabian price hike also follows a decision last week by OPEC+ to broaden its crude output by 648,000 barrels a day in July and August. According to BNN Bloomberg, the increase is about 50% more than the 23-nation consortium has released in recent months, but it might not make much of a difference at the pumps if some nations, including Russia, are finding it hard to pump more oil.
National average gas prices hit their highest in recorded history almost every day now. Today is no exception, as costs across every grade are at all-time highs, according to the latest AAA stats. The price for regular unleaded is $4.87 and for diesel it is $5.65. Today, ten states are paying more than $5.00 a gallon for regular unleaded gasoline and California is paying a whopping $6.34 per gallon.
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