Oil prices ticked up in early Asian trading on Thursday, steadying from a sell-off the previous day after Saudi Arabia’s state oil company sharply raised March oil prices.
Brent crude futures rose 14 cents, or 0.19%, to $74.75 a barrel by 0148 GMT. U.S. West Texas Intermediate crude was up 18 cents, or 0.25%, to $71.21 a barrel.
Saudi Aramco, the world’s leading oil exporter, on Wednesday announced it would sharply increase prices to buyers in Asia for March delivery amid rising demand from China and India as U.S. sanctions disrupt Russian supply.
Aramco also increased the March price for shipments across all other regions, suggesting that “the new sanctions against Russia are starting to bite and the Saudis have been able to take advantage of a tighter market,” said Tony Sycamore, market analyst with IG.
The U.S. last month imposed aggressive new sanctions on Russia’s oil trade, targeting the “shadow vessels” understood to be utilised to evade trade blockades.
“Additionally after the overnight sell-off and the Saudi news, there is likely to be some buying from traders covering shorts ahead of a strong band of support in the $70/68 region,” Sycamore said.
Oil prices had fallen more than 2% on Wednesday as a large build in U.S. crude and gasoline stockpiles signalled weaker demand, and as investors weighed the implications of a new round of U.S.-China trade tariffs, including duties on energy products.
“While some tariff measures could put upward pressure on oil prices, the net impact will likely be bearish, given their potentially adverse effects on the global economy and Trump’s proven willingness to offer carve-outs for energy (to limit impacts to supply),” analysts from BMI said in a note.
So far, the 10% tariffs the U.S. imposed on China on Tuesday fell short of President Donald Trump’s campaign threats, and China’s tit-for-tat measures were seen as limited in nature.
Beijing in response had announced tariffs on imports of U.S. oil, liquefied natural gas and coal on Tuesday, but China’s purchases from the U.S. are relatively modest, blunting the impact of the new measures.
(Reporting by Colleen Howe Editing by Shri Navaratnam)