Saudi Aramco to cut oil prices to Asia

Intense competition forces the kingdom to back down

Saudi Aramco is expected to cut its main oil prices to Asia for the first time since June,
in a move that reflects the kingdom’s declining negotiating power in the face of intense competition
from the United States and the North Sea.

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The details
The most important expectations

The details

According to expectations from a Bloomberg survey of six refining and trading companies,
the state-owned Saudi company is expected to cut the official selling price of Arab Light crude by about $1.05 per barrel for January contracts compared to the previous month.
This would be the largest decrease since February.

The cut comes after Asia’s physical oil markets declined last month, and Brent crude, which is considered a global benchmark, fell by about 15% from its high in late September. As a result, it is becoming difficult for Saudi Arabia to maintain current oil prices.

On the other hand, supplies from the United States, Guyana, and the North Sea have increased, highlighting that the kingdom’s strategy of restricting production is exposing it to the risk of losing market share.

As a result, buying oil from outside the Middle East is now more attractive to Asian buyers, as the price of Dubai crude, which is a key benchmark for pricing most Gulf Arab crudes, has risen. Dubai and Brent crudes are now close to parity, according to data from PVM Oil Associates, an unusual situation as Brent is generally higher most of the time. West Texas Intermediate crude is currently about $5 per barrel cheaper than its Middle Eastern counterpart (Brent).

The most important expectations

The survey expectations suggest that Saudi Aramco’s cut in oil prices to Asia could range between 75 cents and $2 per barrel, and were largely based on the assumption that Saudi Arabia will extend its unilateral production cuts of 1 million barrels per day into next year at the upcoming OPEC+ meeting on Thursday.
Aramco typically publishes its official crude oil prices in the first five days of the month.

Saudi Aramco to cut oil prices to Asia

Saudi Aramco to cut oil prices to Asia

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