Saudis Cut Key Oil Price for Asian Buyers in Sign of Surplus
(Bloomberg) -- Saudi Arabia dropped the price of its main oil grade for buyers in Asia to the lowest in years, a further sign that global supplies are running ahead of demand.
State oil producer Saudi Aramco will cut the price of its Arab Light grade for buyers in Asia by 30 cents a barrel to parity with the regional benchmark for March, according to a price list seen by Bloomberg. It’s the lowest level for the kingdom’s prices since late-2020.
Still, the reduction was less than even the smallest estimate in a survey of refiners and traders, offering a sign that the kingdom has faith in demand for its barrels. Aramco’s Chief Executive Officer Amin Nasser has previously said that fears of a glut are overblown.
Saudi Arabia’s monthly crude pricing is keenly watched by traders across the globe as it sets the tone for other sellers in one of the world’s top producing regions. Asia is the biggest market for Middle Eastern crude, with the prices set for refiners determining the profitability of processing and influencing the cost of fuels like gasoline and diesel the world over.
The OPEC+ producers group, led by Saudi Arabia and Russia, agreed to keep production levels steady during discussions on Feb. 1, maintaining an earlier decision to forgo output increases to avoid flooding the market. In November, eight of the group’s key members decided to pause increases through the first quarter, after a months-long stretch of easing production quotas and adding barrels to win back market share.
Global benchmark Brent crude dropped by 18% last year as the addition of supplies from OPEC+, as well as producers in the Americas like the US and Guyana, outpaced growth in demand. So far this year, prices have jumped and are currently trading above $67 as concerns that the US might attack Iran keep traders on edge.
The kingdom also cut prices to Europe and the US.
(Updates with more prices.)
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