8/4/2019 High Asian Demand May Lift Up Saudi Crude Prices

1/3

Saudi Arabian crude may rebound from the lowest level in nine months relative to Asian prices as the worlds biggest exporter seeks to benefit from rising demand

from Japan to China and South Korea.

Arab Light for October, the countrys biggest crude export, may rise to $1.30 a barrel more than the Oman and Dubai grades when Saudi Arabian Oil Company sets pricesthis month, according to the median estimate of six refiners and analysts surveyed.That compares to 75 cents a barrel for September cargoes, the lowest level since last year. Extra Light, Arab Heavy and Arab Medium may also increase, the survey showed.

Asian refiners are consuming more crude as growing demand for oil products prompts them to cut maintenance and boost processing rates. Japan, the worldsthird-biggest crude user, increased Saudi purchases by 33 per cent last month.

Chinas July imports jumped 5.9 per cent, while South Koreas rose 7 per cent. Saudi Arabia pumped more crude in August than at any time in 30 years as demand pushed up the cost of earliest-delivery oil.

High premium

Saudi Arabia will surely raise the price across all their barrels, said OsamuFujisawa, an independent oil economist in Tokyo who worked for 30 years at Saudi Aramco, as the state-owned producer is known.

An acute increase in near-term benchmark prices will encourage the company tocharge a higher premium for deliveries to compensate for lower-priced futurecargoes, he said. The difference between near-term Dubai prices and cargoes for loading in three months shifted to a so-called backwardation, or premium, fromcontango, or discount, on August 17.

Prompt-delivery Dubai oil cost 56 cents more than future contracts on Thursday,compared to 75 cents less on July 15, according to data.

8/4/2019 High Asian Demand May Lift Up Saudi Crude Prices

2/3

If the market is in backwardation, producers have to increase prices to make up for the loss, said Ehsan Ul Haq, a senior market analyst with KBC Energy Economics inWalton-on- Thames, England. Japan has to prepare itself for the winter and buy more barrels.

Saudi Aramco prices its exports relative to the average of Dubai and Oman crudes,which are benchmark grades for the Middle East. Those markers averaged $109.30 abarrel on Thursday, according to data. Middle East oil exporters such as Iraq, Kuwait and Iran set their official prices based on changes to Saudi levels.

04/Sep/2011Bloomberg

According to Iranian news media, PetroChina will invest USD 8.4 billion to developthe Azadegan oilfield. The site is 80 kilometers west of Ahvaz close to the border with Iraq.

Iran Oil Engineering general manager Alireza Zeiqami says PetroChina will begin first phase development of the Azadegan oilfield this year. Its 2011 target is to drill 185wells.

The Azadegan oilfield has reserves of 3.2 billion barrels of oil, including recoverable

reserves of 5.3 billion barrels. Daily capacity of crude oil is expected to reach 600,000 barrels after construction is complete.

Total investment in the Azadegan oilfield is USD 12 billion. PetroChina will invest USD 8.4 billion while Iran Oil Engineering and Tokyo based Inpex Corporation will respectively provide the remaining 20% and 10% of total investment.

(Sourced from China Business News)

8/4/2019 High Asian Demand May Lift Up Saudi Crude Prices

3/3