The escalating instability in the Middle East has heightened volatility in the oil market. Saudi Arabia has raised the official selling prices of its main Arab light crude to Asian customers.
According to a price list seen by Bloomberg, the state-owned producer Saudi Aramco increased the official selling price of its main Arab light crude to Asian customers by 90 cents to a premium of $2.20 per barrel above the regional benchmark.
At the same time, Saudi Aramco has lowered the prices of all grades of oil destined for the United States and Europe.
On Tuesday, Iran launched around 200 missiles at Israel in retaliation for the killing of a Hezbollah leader by Israel. Israeli Prime Minister Benjamin Netanyahu stated that Iran will pay a price for this.
The concern in the market is whether Israel will target Iran’s oil facilities in retaliation. Iran, the world’s seventh-largest oil producer, exports about half of its production overseas, with China being a major importer.
Since the attack by Iran, the oil market has been in a state of tension. Benchmark Brent crude rose over 8% that week to around $78 per barrel.
Analysts say that now, depending on Israel’s next move, there is a risk of a larger-scale war making energy costs a renewed focus.
Despite the recent escalation in the Middle East, the oil market has largely shrugged off most regional risks so far this year. Concerned that soft Chinese oil demand could leave additional crude on the market, the OPEC+ alliance led by Saudi Arabia and Russia suspended a two-month production increase plan until early December.
(This article references reports from Bloomberg.)