- Saudi cuts Arab Light OSP to Asia to 30¢ premium for Feb.
- Reflects oversupply; OPEC & pauses Q1 hikes; no Venezuela talk.
- IEA: 3.8M bpd glut 2026; Brent down 20% last year.
Saudi Arabia has lowered the official selling price (OSP) of its flagship Arab Light crude to Asia for the third consecutive month, setting the shipments of February at a 30 US cent premium over the regional Oman/Dubai benchmark, down from 60 cents in January, according to a pricing list that was seen. The reduction in price is a result of the worry of oil supply glut in the global oil markets, even though OPEC+ has agreed to pause the planned supply increases in Q1 2026 at a short meeting over the weekend.
The move is in tandem with declining Middle East crude benchmarks as the forward curves for Dubai and Murban have lost bullish structures due to plentiful supplies resulting from OPEC+ and non, OPEC producers' hikes. The International Energy Agency anticipates a 3.8 million barrel per day surplus in 2026, which is one of the reasons for Brent's worst annual decline since 2020, a fifth drop last year.
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The OPEC+ meeting sidestepped addressing the consequences of a political upheaval in Venezuela after the US seized Nicolas Maduro, judging that the effects were too premature to be felt. The risks associated with geopolitics, for example, the war between Ukraine and Russia and the sanctions imposed by the US on Russia and Iran, create a lot of uncertainties, which are further exacerbated by the negative economic outlook of China, the world's largest importer.
Saudi Aramco's pricing is determining the price of Iranian, Kuwaiti, and Iraqi grades, which together amount to around 9 million barrels per day flowing to Asia. This third reduction in the volume of crude oil is a clear indication of the existence of competitive pressure to keep the market share at the current level in the face of the availability of rival supplies.