Saudi Arabia lowers oil prices in Asian markets…

Saudi Arabia has decided to cut oil prices for its Asian buyers more than expected in a dramatic move as OPEC+ again delays a planned production increase. State-owned oil producer Saudi Aramco will offer its flagship Arabian Light crude oil starting in January at a premium of 90 cents per barrel lower than the regional benchmark, Bloomberg reported. This marks a significant decrease from the $1.70/barrel premium this month. Initially, industry analysts expected a smaller drop of $1 a barrel, based on surveys of traders and refiners.

Also read: World’s largest import market for petroleum lubricants and greases

The price reduction decision is not limited to the Asian market; similar adjustments have been made to buyers in northwest Europe and the Mediterranean region. In contrast, prices in North America remained unchanged, highlighting strategic differences in pricing across regions.

Global benchmark oil prices are experiencing a downward trend, with worries about weak demand growth, especially from China, raising concerns about a glut in global markets next year. Brent crude oil prices are hovering above $71 a barrel. This comes as geopolitical tensions have eased following the ceasefire between Israel and Hezbollah, which has influenced traders to withdraw the risk premium that had previously driven prices higher.

At the same time, the latest data from the IndexBox platform shows that Saudi Arabia’s oil exports in 2023 will reach a staggering US$206.7 billion, highlighting the country’s important role in the global oil market. Saudi Arabia’s imports were relatively small at $68 million, with major import partners such as Nigeria and the United States contributing $68 million and $28,200 respectively. OPEC+, led by Saudi Arabia and Russia, has put themselves in a difficult position by strategically delaying plans to increase production by another three months. The looming threat of oversupply prompts a critical decision: whether to continue production cuts into 2025 or risk a potential collapse in prices.

Source: IndexBox Market Intelligence Platform