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.
The surcharge matters because of the central role that Saudi Arabia plays in the market, pumping roughly one-in-10 barrels worldwide. Riyadh’s pricing strategy is stoking global inflationary pressures, potentially forcing central banks to keep interest rates higher for longer. At the same time, the geopolitical hand of Riyadh gets stronger.
On Wednesday, the price of Saudi’s flagship oil grade Arab Light rose to almost $98.47 a barrel in Europe, according to data compiled by Bloomberg. Over the last 40 years, Arab Light has traded above $100 only a handful of times — in 2008, between 2012 and 2014, and in 2022.
No comments:
Post a Comment