Saudi Aramco – one of the main beneficiaries of the deal, OPEC+

After extension in the framework of OPEC+ last Saturday of the current restrictions of oil production until July, Saudi Arabia, and state company Saudi Aramco (SE:2222), in particular, have achieved the greatest growth of export prices for its crude oil for at least two decades, according to Bloomberg.

Limiting production will have an impact primarily on the supply of Saudi oil to the region, which is a leader in the procurement of crude oil — Asia, and generally eliminates almost all of the discounts that the Kingdom was doing to buyers during his short-lived price war with Russia.

After a deep fall in oil prices in April, now the strategy, the KSA is placed on the sharp rise using all means available in its Arsenal of capabilities. After it — because it sets the course of oil prices in the middle East, can be followed by other manufacturers.

The oil market began to recover quickly after Russia agreed with Saudi Arabia on the unprecedented production cuts in may. Last Saturday, the group OPEC + decided to extend these restrictions until the end of July. The market reaction was immediate: the reference Brent crude oil, a decrease of 36% this year, offset part of its losses and ended trading on Friday at around more than $40 per barrel.

From the current situation on the market primarily benefit manufacturers that can not bother the refinery. Refineries that receive the profits from processing oil into fuel, are struggling to keep up with rising prices in the market and has already expressed concern that the high price would reduce their margin.

The background of the situation is short-lived price war Saudi Arabia with its main competitor — Russia, which she launched in March, having reduced official selling prices to the maximum over the three decades of level. The Kingdom has taken such a step after are unable to reach agreement with Russia on the continuation of production cuts in the pandemic that caused the fall of demand for oil.

After numerous consultations at the highest level of OPEC+ has once again agreed to hold talks and to achieve the largest in the history of manufacturing constraints, vowing to remove from the market of 9.7 million barrels a day. American production has declined by about 2 million barrels per day since the low price is not profitable for drillers, and they began to close the well.

OPEC on Saturday + decided to leave the production in July almost at the same level, rather than to reduce the decrease to 7.7 million barrels a day as previously planned. And the Aramco company, which usually announces the prices on the fifth day of each month, have postponed their July figures until until OPEC members + ‘t made a decision on the extension of the cuts.

And that’s when the demand for oil in China went to the mountain, the Saudis have begun to raise prices. Compared to the previous month’s official selling price of crude oil Arab Light grade to Asia, which accounts for more than half of sales of Saudi oil is at the maximum for the last 20 years. Aramco sells the brand of Arab Light to Asia at $6,10 per barrel with a premium of 20 cents.

In July the prices of all grades of oil to Asia rose by $5,60-7,3 per barrel. As for the other buyers in the United States, the Mediterranean region and northwestern Europe — then they will also pay more.