Saudi Arabia, the worlds’ largest exporter, has
raised the price of crude oil for the US and Asia with effect from December.
As for Asia, the Arab light crude has gone up by 60
cents. The rise in price will affect the key customers of the Kingdom in the region
that account for 60% of its exports; they include China, Japan, South Korea and
India.
The Saudis have been increasing the price of crude
oil for Asia and the US from time to time this year. On the other hand, there are
instances when they reduced the price for the regions too; in short, the
Kingdom listens to the grievances of its loyal customers when the latter feel
the pinch – and then respond favourably.
Saudi Aramco, the state oil company, however, showed
reluctance when the very nations joined the chorus of global calls to increase
the production that ultimately led to the joint release of strategic petroleum
reserves, SPRs, led by the US.
Saudi Arabia may have been prompted to make the move
in light of clear signs of economic recovery in Asia despite the outbreak of
Omicron variant of the Coronavirus, despite the forecast of an oil glut in the
first quarter of 2022.
The Kingdom, meanwhile, has been monitoring the progress – or lack of
it – of the ongoing talks over the JCPOA, 2015 Iran nuclear deal.
Since the momentum of the talks has reached a point
close to stalling, the possibility of Iran, the regional rival of the Kingdom,
opening floodgates to the crude markets is slowly going up in smoke.
In these circumstances, Saudi Aramco saw an opportunity
to compensate for the losses due to falling prices during the past two weeks.
The rise of crude oil price comes at a time, when
the price of LNG, liquefied natural gas, continue to fall in the energy
markets, despite northern hemisphere being in the winter season.
The consuming nations in Asia have not reacted
publicly about the rise in crude oil price for the region. They, however, must
have been frustrated by the move, especially at a time when the world as a
whole has been forced to deal with the new outbreaks of the Coronavirus.
They can only hope that Aramco will bring the price
down at a certain point in time while sensing the pulse of the nations in the
region – as the former has done a few times in the past.
