In May, Asian oil refiners will pay a record premium for Saudi crude oil — $19.50 per barrel above regional benchmarks. For comparison: in April, this premium was only $2.50. An eightfold jump in a month.
But there is a nuance that makes this record ambiguous. The level is still below $40 per barrel — exactly how much traders and oil refiners surveyed by Bloomberg expected. In other words, Saudi Aramco took advantage of the crisis, but not to the maximum extent.
Why the jump happened at all
Saudi Arabia raised the price of its main crude oil grade to a record premium against the backdrop of conflict in the Persian Gulf and Iran's effective closure of the Strait of Hormuz.
About 20 million barrels of crude oil and petroleum products were transported daily through the Strait of Hormuz in 2025. After the United States and Israel began joint airstrikes against Iran on February 28, this flow was reduced to "a thin trickle" — according to the International Energy Agency's assessment.
Transit through the strait for any vessel going "to and from" ports of the United States, Israel, and their allies is prohibited.
Statement by the Islamic Revolutionary Guard Corps (IRGC), March 2025
War risk insurance premiums for tankers in the strait increased from 0.125% to 0.2–0.4% of the vessel's insurance value per passage. For large oil tankers, this amounts to an additional quarter million dollars per trip.
Riyadh's logic: a record with limits
Raising the price to $40 — is technically possible. But Saudi Aramco stopped at $19.50. The likely reason is not altruism, but calculation: too high a price will force Asian buyers to seek alternatives or cut refining, which would harm long-term contracts.
One way to partially compensate for the deficit is to increase oil pumping through the "East-West" pipeline from the Persian Gulf to the Red Sea. The capacity of the Port of Yanbu allows redirecting about 4 million barrels per day. But the port is within reach of Iranian and Houthi missiles, and the route through the Bab el-Mandeb Strait exposes tankers to Houthi attacks.
- April 2025: Arab Light premium for Asia — $2.50/barrel
- May 2025: $19.50/barrel — a record in the entire history of observations
- Market expectations: ~$40/barrel — not achieved
- Strait of Hormuz: ~20 million barrels/day in 2025 — currently "a thin trickle"
For the end consumer in Asia, this means more expensive gasoline and plastic already in the summer — regardless of whether they know where the Strait of Hormuz is located.
If the United States and Iran do not reach a ceasefire by the end of April, the June price of Arab Light may come perilously close to that $40 — and then Riyadh's restraint will no longer work.
