Saudi Aramco hikes oil prices for August deliveries, surprising markets after OPEC+ agreed to raise output. The state-owned giant increased rates for all regions, with European buyers facing the steepest jump. Meanwhile, Asian and North American customers saw smaller but still notable rises.
According to Amena Bakr of Kpler, Saudi Aramco hikes oil prices by $1.40 per barrel in Europe. Asian refiners will pay between $0.90 and $1.30 more, while U.S. buyers see only a $0.20 to $0.40 increase. Analysts expected higher prices due to summer demand but were caught off guard by the timing.
OPEC+ recently agreed to boost supply by 548,000 barrels per day (bpd), exceeding forecasts. Consequently, Saudi Aramco’s decision to hike oil prices reveals oil prices dipped slightly at Monday’s opening. Brent crude traded at $67.88, while WTI stood at $66.14, both down from last week’s close.
Helima Croft of RBC Capital Markets noted this move restores 80% of the 2022 production cuts. However, Reuters reported that actual output growth lags behind targets. Most increases came from Saudi Arabia, the group’s largest producer.
Goldman Sachs anticipates another major output hike in September possibly 500,000 bpd. The bank stated that OPEC+ aims to stabilize markets while curbing U.S. shale growth. This strategy suggests a long-term shift toward balancing supply and demand, with Saudi Aramco’s recent oil price hike as a sign of ongoing adjustments.
Summer driving season typically spikes fuel demand, justifying Aramco’s pricing move. Additionally, OPEC+ compliance issues mean actual supply may not meet announced levels. Therefore, traders remain cautious despite the promised production boost.
Saudi Aramco hikes oil prices despite OPEC+ easing cuts, signaling tight market conditions. With further increases possible, consumers worldwide should brace for higher fuel costs in coming months. Analysts will watch closely for September’s next OPEC+ decision.
