Abu Dhabi raises crude prices following OPEC+ output cut extension

A general view of ADNOC's headquarters in Abu Dhabi, UAE. (File photo: Reuters)

Abu Dhabi boosted pricing for its main Murban crude grade one day after Saudi Arabia posted sharply higher prices of its own, adding weight to efforts by producers to extend a rally in oil while they also limit supply.

Government-owned producer Abu Dhabi National Oil Co. raised July pricing for its flagship grade by $5.45 a barrel, according to a statement on Monday. Murban swung to a premium over the benchmark from a discount for the first time since March, when Saudi Arabia sparked a brief if devastating price war.

Crude markets have tightened since the OPEC+ alliance agreed in April to make unprecedented cuts in output as demand plunged amid the coronavirus. The producers, including the United Arab Emirates, of which Abu Dhabi is the capital, decided on Saturday to extend those cuts for another month through July. Brent crude, down about 37% this year, has clawed its way back to more than $40 a barrel this month.

Saudi Arabia, de facto leader of the Organization of Petroleum Exporting Countries, increased its pricing on Sunday, exceeding market expectations and causing refiners to worry about their profit margins. State-run Saudi Aramco sees “good indicators that demand is coming back and thriving,” Saudi Energy Minister Prince Abdulaziz bin Salman said Monday at a news briefing.

Aramco is the first Persian Gulf producer to announce pricing each month, and it generally sets the trend for roughly 14 million barrels a day of crude exports from the region. The Saudi increases for July all but erased the pricing cuts and discounts that the producer offered during the earlier price war.

Adnoc first began publishing forward pricing for sales in March as the pandemic was crippling demand for crude. Murban for March sold at a $1.88 premium over the regional benchmark before plunging to discounts. For July, it will sell at a $1 premium.

The UAE is OPEC’s third-largest producer, and Abu Dhabi holds most of the country’s crude.

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Last Update: Monday, 08 June 2020 KSA 18:38 - GMT 15:38
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