For Saudi Arabia, $100-a-Barrel Oil Is Already Here
Central bankers need to pay attention to the price of Arab Light crude for clues about the inflation outlook.
The price of oil is high — and rising.
Photographer: Djmilic/iStockphoto via Getty Images
In the world of oil, there’s no such a thing as THE price. There are dozens of different measures, one for each variety of crude. The financial market focuses on two: Brent, and West Texas Intermediate, the grades traded in London and New York, respectively. They suggest a price hovering around $90 a barrel. But from the perspective of Saudi Arabia, oil is already touching $100.
The discrepancy reflects the pricing power that Saudi Arabia has gained over the last year-and-a-half. It has allowed Riyadh to charge a record premium for its oil, particularly for American and European customers seeking alternatives to Russian crude.