S. Arabia cuts oil prices for Asia

Saudi Arabia has announced significant cuts to oil prices for Asian buyers, exceeding market expectations, as the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) further delayed plans to revive production. The move highlights ongoing concerns over a sluggish demand outlook for the global oil market.

Saudi Aramco, the Kingdom’s state oil producer, revealed that its flagship Arab Light crude grade will sell at a premium of 90 cents per barrel above the regional benchmark in January 2024. This marks a steep drop from the current month’s premium of $1.70 per barrel. Market analysts had anticipated a smaller reduction, forecasting a premium of around $1, according to a survey of traders and refiners.

Price cuts were also extended to buyers in north-west Europe and the Mediterranean, while prices for North America remained unchanged.

The adjustment comes as benchmark Brent crude prices hover slightly above $71 per barrel. Concerns over weak demand, particularly in China, have dampened market sentiment, with analysts predicting a potential oversupply next year.

The recent ceasefire in Lebanon has further reduced geopolitical risk premiums, contributing to the subdued trading range.

The decision follows OPEC+’s move to postpone production increases initially planned for January 2024 by an additional three months. This marks the third such delay, reflecting the coalition’s cautious approach amid fears of a looming market surplus.

Attribution: Bloomberg

Subediting: M. S. Salama