Saudi Arabia Raises Crude Premium To Record $19.50 For Asia May Deals

Asian countries will have to pay a higher premium to buy oil from Saudi Arabia as the Gulf nation has raised the price of its main oil grade to Asia to a record high premium.

The world’s biggest oil company, Saudi Aramco, will increase flagship Arab Light crude prices for May sales to a premium of $19.50 over regional benchmarks for refiners in Asia, according to a report by Bloomberg.

Arab Light crude is currently hovering around the $110 per barrel mark. That is, Asian refiners will have to pay around $130 for a barrel of the grade.

However, the premium of $19.50 is still lower than the $40 per barrel premium anticipated by traders and refiners in a Bloomberg survey, the report added.

According to traders, the premium not only prices in market volatility, it also includes loading in the Persian Gulf port of Ras Tanura, though all of its exports are currently being shipped from the port of Yanbu on the Red Sea coast.

Buyers have to incur additional costs to collect those barrels.

The higher premium will only increase the challenges for Asian countries like India, which are heavily dependent on imports to meet their energy needs.

India imports almost 90 percent of its crude oil needs. It is already facing a crunch of natural gas due to the war in West Asia and the closure of the Strait of Hormuz.

If oil prices continue to rise, the crisis will have deeper consequences for Asian countries. India is already paying a premium of $10 per barrel to buy Russian crude, which was available at a discount of $8 per barrel before the war.

In its latest report, Moody’s Ratings has pared India’s growth forecast for FY27 to 6 percent, which was 6.8 percent earlier.

The agency has flagged West Asia as the reason for a likely slowdown in the Indian economy.

The main concern is India’s heavy dependence on the West Asia region for energy supplies, it said. High oil prices will deplete the country’s forex reserves, raise the subsidy bill, and may derail the fiscal deficit target going forward.