Saudi Aramco Lifts January-Loading Oil Prices to Asia, Most U.S.Prices Up

Saudi Aramco, the world’s largest state oil company, raised official selling prices for all crude types for customers in Asia, widening the premium for light grades to the highest levels since the third quarter of 2008.

The company, the world’s largest crude exporter, also increased all formula prices to buyers in the Mediterranean and most to the U.S. and northwest Europe for January. The premium for Extra Light crude to the U.S. was set at the highest in more than six years, according to Bloomberg data on past prices.

Aramco increased the formula price the most for Arab Super Light crude, a grade sold only to Asia, according to an e-mailed statement today. The grade will cost $1.90 a barrel more in January, rising to a $5.25 premium above the average of Oman and Dubai oil, the two Gulf benchmarks used by traders.

The premiums over regional benchmark prices for that grade, Extra Light and Arab Light, Saudi Arabia’s largest export type, reached highs as profit increased for Asian refiners, meaning they earned relatively more from turning a barrel of crude oil into refined products like gasoline.

The formula price Extra Light crude to Asia will be $1.30 a barrel more in January, rising to a $3.10-a-barrel premium, the highest since September 2008. Light Crude will rise by $1.25 a barrel to a $1.60 premium over the average of Oman and Dubai oils. That’s the widest premium since July 2008.

U.S. Buyers

Saudi Arabia’s state-owned producer set the price for its Extra Light crude oil for January loadings for U.S. buyers at a premium of $2.50 a barrel over the Argus Sour Crude Index, $1.10 a barrel more than December cargoes. Light crude rose 50 cents to a 25 cents-a-barrel premium for U.S. buyers. Aramco left Arab Medium unchanged and cut Arab Heavy 40 cents to a $3.75 a barrel discount for U.S. buyers.

The increase in prices to Asia exceeded expectations of refiners in the region, according to a Bloomberg survey last week. Light crude was expected to rise to a premium of $1.15 a barrel, according to the median of six regional refiners. Arab Extra Light was expected to rise to a $1.25 premium.

A shortage of diesel in China pushed up premiums for cargoes traded in the spot market to three-year highs. The supply crunch also helped raise processing profits for turning crude into gasoil to $14.32 a barrel on Nov. 15, the highest since January 2009, according to data from PVM Oil Associates.

OPEC Pricing

The largest Organization of Petroleum Exporting Countries member and the group’s de-facto leader, Saudi Arabia has driven production cuts announced in 2008 to support prices. OPEC left quotas unchanged at its last meeting in Vienna in October.

Member countries meeting again this week in Quito, Ecuador, to review output levels and demand are unlikely to change quotas, oil ministers from Venezuela, Libya and Algeria said last week. Ministers from the 12-nation group may seek tighter compliance with OPEC’s existing output guidelines when they meet Dec. 11, Libya’s top oil official, Shokri Ghanem, said.

Venezuela’s Rafael Ramirez said $100 represents a “fair” price for a barrel of oil. The ministers spoke at a gathering of natural-gas exporting countries in Doha.

Crude oil for January delivery rose 3.29 percent on the New York Mercantile Exchange during November to $84.11 a barrel at the close of trading Nov. 30. Saudi Oil Minister Ali al-Naimi said Nov. 1 that crude-importing countries are happy with prices between $70 and $90, a broader range than the $70-to-$80 spread he said on March 30 was “as close to perfect as possible.”

Al Naimi said at OPEC’s last meeting, on Oct. 14, that market conditions were “ideal” as supply was meeting “good” demand from Asia.

Saudi Output

Saudi Arabia pumped 8.235 million barrels of oil a day in November, 15,000 less than in October and about 180,000 barrels a day above its OPEC quota, according to Bloomberg estimates.

Aramco last month raised all crude grades for customers in Asia for December, in a third consecutive monthly increase as refining profit climbed. Aramco lowered its price formula on light and medium grades to the U.S. for December and left prices for Extra Light and Arab Heavy crudes unchanged.

The company boosted prices across the board on all grades to all buyers for October delivery. The company supplied full volumes to refiners in Asia throughout last year.

Saudi Arabia was the fourth-biggest exporter of crude to the U.S. last year, dropping back from second place in 2008, data from the U.S. Energy Information Administration show. Canada, Mexico and Venezuela all shipped more crude to the U.S., the data show.

Pricing Tables

The following table gives the differentials of the four regions in relation to benchmark prices, the month-on-month change and the degrees of gravity as defined by the American Petroleum Institute. Prices are in U.S. dollars a barrel.

*T United States

Variety API January December Change Extra Light 38.5 +2.50 +1.40 +1.10 Arab Light 32.5 +0.25 -0.25 +0.50 Arab Medium 31 -1.90 -1.90 0 Arab Heavy 27 -3.75 -3.35 -0.40

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Prices for customers in the U.S. expressed as a differential against Argus Sour Crude Index published by Argus Media Ltd.

Asia

Variety API January December Change Super Light 50.6 +5.25 +3.35 +1.90 Extra Light 38.5 +3.10 +1.80 +1.30 Arab Light 32.5 +1.60 +0.35 +1.25 Arab Medium 31 -0.55 -1.60 +1.05 Arab Heavy 27 -2.15 -3.10 +0.95

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Prices for Asian customers expressed as a differential against the average of Oman and Dubai grades, the two Arabian Gulf benchmarks used by Asian oil traders. The Dubai and Oman price assessments are published by Platts, the energy- information division of McGraw-Hill Cos.

Northwestern Europe

Variety API January December Change Extra Light 38.5 +0.05 -0.85 +0.90 Arab Light 32.5 -2.25 -2.50 +0.25 Arab Medium 31 -4.05 -4.20 +0.15 Arab Heavy 27 -6.00 -5.65 -0.35

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Mediterranean

Variety API January December Change Extra Light 38.5 +0.25 -1.35 +1.60 Arab Light 32.5 -1.70 -2.65 +0.95 Arab Medium 31 -3.90 -4.55 +0.65 Arab Heavy 27 -5.90 -6.35 +0.45

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Prices for Northwest European and Mediterranean customers are expressed as a differential against the Brent weighted average posted by Intercontinental Exchange.

To contact the reporters on this story: Anthony DiPaola in Dubai at adipaola@bloomberg.net.

To contact the editors responsible for this story: Stephen Voss on sev@bloomberg.net.

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