According to Reuters, Saudi Arabia will supply full agreed oil volumes to most of its Asian consumers, citing anonymous people familiar with the Kingdom’s plans. This will be the fourth month in a row that Saudi Arabia has supplied full amounts, implying that crude oil supplies are enough for now.
Saudi Arabia had already informed customers that it would be unable to produce full contractual amounts, causing international oil prices to rise on the assumption that supply would be insufficient for full exports. Nonetheless, in October, the Kingdom stated that it was prepared to deliver more volumes to some Asian clients while continuing to satisfy its contractual obligations with the others.
Just days after news came that a new coronavirus variety was out there, the Kingdom hiked its official selling prices for oil, putting pressure on international benchmarks. This vote of confidence may have helped to keep prices stable. For Asian customers, the increase was $0.60 per barrel, bringing the premium to the Dubai/Oman spread to $3.30 per barrel. The price increase for US purchasers ranged from $0.40 to $0.60 per barrel, depending on the quality.
Despite the Omicron scare, the price hikes came despite a decision at the most recent OPEC+ conference to keep raising 400,000 bpd to members’ combined supply. This indicates that Saudi Arabia is either quite optimistic about crude oil demand in the near future, or it is attempting to stabilise prices by exhibiting this optimism.