- Aramco lowers Arab Light crude price by $1 per barrel.
- OPEC+ increase in production contrasts predictions of global oversupply.
- Price cuts target Asia, Europe, and most US crude deliveries.
Saudi Arabia plans to reduce prices on all its crude grades for Asian buyers and on most barrels for other regions, following Opec+'s announcement to increase production, contrary to widespread predictions of an impending oversupply.
State producer Saudi Aramco is reducing the price for its main Arab Light crude by US$1 a barrel for deliveries in October to its largest market, as per a price list viewed by Bloomberg. The grade will be priced at a premium of US$2.20 a barrel over the regional benchmark in October, which is less than what refiners and traders anticipated.
A survey of refiners and traders indicated that the company was anticipated to reduce the price by 50 US cents per barrel. Saudi Arabia and its OPEC allies agreed over the weekend to continue increasing production further, following rapid increases in recent months. The alliance aims to regain market share it lost to competitors, potentially departing from its usual goal of supporting crude prices.
Aramco is reducing prices on all its crude grades to Europe by 80 US cents per barrel and decreasing most of the barrels intended for the US. The sole grade that remains the same is Arab Light to the US, priced at a premium of US$4.20 a barrel in October, consistent with September.
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Traders in the region report that the unexpected magnitude of the price reduction for Asia is astonishing and may indicate a bearish trend.
Aramco earlier increased prices for Asia for August and September due to larger Opec+ quota increases, showing confidence in the strength of summer demand. That robust market may start to diminish as more supply becomes available. The reduction in Aramco’s selling prices following two months of increases for Asian buyers may be a welcome development for refiners concerned about possibly declining margins due to a potential oversupply.