July 5 (Bloomberg) -- Saudi Aramco, the world's largest state oil company, increased prices of most crude oil grades for export to Europe to a three-year high as maintenance at North Sea fields increased demand for Middle Eastern and Russian supplies.

The Dhahran, Saudi Arabia-based company raised prices for shipments to Europe in August by between 40 cents and 70 cents a barrel, Aramco said in an e-mailed statement late yesterday. The oil producer also increased prices of Arab Medium and Arab Heavy prices for shipment to Asia, and cut prices of all grades it sells to the U.S. by 35 cents to 50 cents a barrel.

Lower oil supply from the North Sea and a drop in output in Nigeria, Africa's biggest producer, are prompting European refiners to seek alternatives. Aramco cut prices for export to the U.S. after stockpiles in that country rose to a nine-year high and were 11 percent more than the five-year average in the week ended June 22.

``European prices are strong because North Sea maintenance is at its peak in August,'' said Anthony Nunan, an assistant general manager for risk management at Mitsubishi Corp. in Tokyo. ``U.S. crude stockpiles are still high.''

For customers in Europe, Saudi Aramco increased the premium on its Extra Light crude to a record 65 cents a barrel, and narrowed the discount for Arab Light to $3.20 a barrel. In relation to benchmark prices Arab Light is at the highest level since September 2004. European prices are expressed as a differential to Intercontinental Exchange's weighted average of North Sea Brent oil.

Nigerian Disruptions

The discount for Arab Medium for export to Europe narrowed by 55 cents to $4.90 a barrel, and the differential for Arab Heavy narrowed to minus $6.60 a barrel. That's the highest relative to the benchmark since July 2004, according to data compiled by Bloomberg.

Eni SpA Chief Executive Officer Paolo Scaroni said yesterday a force majeure is still in place on shipments from the company's Ogbainbiri flow station in Nigeria.

Eni, Europe's fourth-largest oil company, declared a halt in deliveries on June 19 after the facility was attacked by gunmen two days earlier. Eni's share of the 37,000 barrels a day produced at the Ogbainbiri facility is 5,500 barrels a day.

Force majeure is a legal clause allowing companies to default on commitments because of circumstances beyond their control.

Royal Dutch Shell Plc's Nigerian venture yesterday said an oil rig was attacked and five expatriate contractors working for Lonestar Drilling Nigeria Ltd. were taken hostage. The spot price of Brent is affected by disruptions in Nigeria because the country's oil is priced in relation to North Sea crude.

U.S. Prices

Aramco cut the premium on deliveries to the U.S., priced against the West Texas Intermediate benchmark, by 35 cents to $1.25 a barrel for Extra Light.

The discount for Arab Light shipments in August to the U.S. widened by 40 cents to $2.15 a barrel, Arab Medium was lowered by 50 cents to minus $4.75 a barrel and Arab Heavy was cut by 40 cents to minus $7.10 a barrel, Aramco said in the statement.

For Asian customers, Aramco cut the price of Arab Super Light by $1.20 to a premium of $6.95 a barrel, and the premium on Extra Light was cut 40 cents to $3.50 a barrel. The producer kept the premium on Arab Light unchanged at 55 cents a barrel, and raised the prices of Arab Medium and Arab Heavy grades.

The discount on Arab Medium narrowed by 30 cents to $1.85 a barrel, and that on Arab Heavy narrowed by 50 cents to minus $4.30 a barrel, according to the statement.

Asian prices are quoted in relation to the average of Oman and Dubai grades, the two Arabian Gulf benchmarks used by Asian oil refiners and traders.

To contact the reporter on this story: Nesa Subrahmaniyan in Singapore at nesas@bloomberg.net.

Last Updated: July 5, 2007 02:37 EDT