Saudi Arabia Cuts Oil Prices for Asia Amid Signs of Weak Demand
State-controlled Saudi Aramco cut its key Arab Light grade for January sales to Asia by $2.20 to $3.25 a barrel above the regional benchmark.
(Bloomberg) -- Saudi Arabia lowered most oil prices for Asia, its main market, in a sign the outlook for demand remains fragile amid continued Covid lockdowns in China.
State-controlled Saudi Aramco cut its key Arab Light grade for January sales to Asia by $2.20 to $3.25 a barrel above the regional benchmark. The move was in line with refiners and traders’ prediction of a drop of $2.10, according to a Bloomberg survey, and takes the price to its lowest level since March.
Brent crude’s up 13% this year to almost $88 a barrel. But it has fallen from more than $120 a barrel in June amid increasing concern among investors about rising inflation and a global economic slowdown.
Saudi Arabia’s neighbor and fellow OPEC member Kuwait on Friday said that oil customers were reluctant to boost imports next year.
Aramco’s decision came a day after the Organization of Petroleum Exporting Countries and its partners -- a 23-nation group led by the Saudis and Russia -- opted to keep output steady.
The company also reduced most prices for European customers, while leaving those for the US unchanged.
Still, Aramco’s official selling prices remain historically high, underscoring the tightness of the physical market, in which actual barrels are bought and sold.
Traders have warned that supply from Russia could fall as the European Union tightens sanctions in response to Moscow’s invasion of Ukraine. In addition, China’s tentative easing of coronavirus restrictions could lead to increased demand in the world’s biggest oil importer.
Saudi Arabia sells most of its oil under long-term contracts to Asia, pricing for which is reviewed each month. China, Japan, South Korea and India are the biggest buyers. Its price moves tend to be closely followed by other Persian Gulf producers including Iraq and Kuwait.
Aramco’s Pricing for December ($ per barrel)
Asia (versus Oman/Dubai)
US (versus ASCI)
North West Europe (versus ICE Brent)
Mediterranean (versus ICE Brent)
(Updates with US, European pricing.)
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