Saudi Arabia's state oil producer Aramco made a decision to raise official selling prices for all crude grades for buyers in Asia and the US after OPEC and its allies agreed to increase output.
The move indicates that the world's biggest crude exporter still sees strong demand in these two large markets despite the spread of the omicron variant.
Saudi Aramco increased January's prices for all crude grades that would be shipped to Asia and to the US. For Asian consumers, the company raised prices above the benchmark level for the key Arab Light grade by 60 cents from December to $3.30 per barrel.
According to Friday's survey of refiners in Asia, Aramco had been expected to raise pricing for the long-term Arab Light contracts by 70 cents a barrel.
On Thursday, OPEC+, led by Saudi Arabia and Russia, decided to continue increasing supply next month despite a surge in coronavirus cases. OPEC+ said it could change plans in a short period of time if the market situation worsens.
Analysts assumed that OPEC+ would suspend production growth. Cartel members surprised traders with their decision to stick to its plan to increase production by 400,000 barrels per day. This decision has increased pressure on oil prices.
Oil prices have been declining in anticipation of an output increase for the sixth week in a row. Since the beginning of November, oil has fallen in price by about 20%, lowering the growth this year to 35%.
Many analysts believe that a surge in inflation was triggered by supply chain disruptions due to high demand for consumer goods compared to slower factory production rates after a year of lockdown restrictions. Retailers have sharply increased prices due to limited supply amid rapidly growing demand.
Therefore, experts point out that it is unfair to blame the producing countries to lower oil prices. As a rule, with less investment in oil-producing enterprises, even if OPEC+ wants to increase production, some of its members simply will not be able to do so.