ENB Publishers Note: Saudi Arabia has announced their budgets over the next few years and they will require $125 to $150 oil to hit the projected budget surplus. So they are not really interested in lowering the prices over the long term. You will see a gradual progression up.
Saudi Arabia raised oil prices for buyers in Asia and the U.S., signaling it sees demand staying strong despite the spread of the omicron variant of the coronavirus.
OPEC+ opted on Thursday to proceed with a production increase for next month, even as new Covid-19 cases threaten to sap demand and with the alliance predicting the oil market will flip from a supply deficit to a surplus in early 2022.
Brent crude is down 15% since late November to just below $70 a barrel, reducing this year’s gain to 35%. The fall is mainly due to the discovery of omicron and the prospect of more barrels coming on to the market from OPEC+ and major importers such as the U.S., who want to lower domestic fuel costs.
Read more: Aramco CEO Stays Bullish on Oil Demand After Rout
While Aramco’s price increase was in line with a Bloomberg survey of traders and refiners in Asia, it suggests bullishness on the part of its management. Chief Executive Officer Amin Nasser said last week he was “very optimistic about demand” and that the market had over-reacted to omicron.
Saudi Arabia is the world’s biggest oil exporter. It sends more than 60% of its crude shipments to Asia, with China, Japan, South Korea and India being the biggest buyers.
