Saudi Arabia on Thursday announced record-high selling prices for crude oil to Asian buyers. The remarkably high increase of 50 cents per barrel was still lower than some forecasts, which anticipated up to $1.50 per barrel.
Bloomberg News postulated the Saudis held their Asian price increase down to fifty cents because demand for oil from the United States unexpectedly fell due to decreased summer driving. In fact, the latest surveys show Americans are driving even less than they did at the height of the Wuhan coronavirus pandemic in 2020.
Saudi Aramco, the kingdom’s national oil company, also increased U.S. prices by fifty cents a barrel, as part of a humiliating rebuke to the Biden administration’s request for increased production to bring American pump prices down. The Saudis increased production by one the smallest margins in Aramco history and raised prices.
Asia is Saudi Arabia’s biggest oil market, with its top four customers being China, India, South Korea, and Japan. China and India are the fastest-growing fossil fuel markets in the world, accounting for most of the increased global demand for energy.
Saudi oil prices for Asia have been increasing fairly steadily since the Russian invasion of Ukraine, in part because some of Russia’s regional oil customers grew wary of doing business with it. Asian buyers have been willing to absorb the price increases because their refineries are posting record profits.
Russia’s oil business, meanwhile, is doing well despite these reluctant buyers because China and India have a bottomless appetite for Russian crude. As a vital strategic ally of the United States, India knows the U.S. is unlikely to interfere with its purchases of deeply discounted Russian oil.