Saudi Arabia to Reduce Oil Prices for Asia Amid Benchmark Declines
Saudi Arabia plans to reduce its oil prices for Asia in May, reaching a three-month low. The cuts, driven by declining regional benchmarks and OPEC+ supply increases, will influence pricing for other Middle Eastern producers. Arab Light prices may adjust to between $1.50-$1.70 above the Oman/Dubai average, with larger reductions expected for Arab Extra Light.
Saudi Arabia, the leading exporter of crude oil, is anticipated to significantly reduce its oil prices for shipments to Asia in May, reaching the lowest level in three months. According to a survey by Reuters among Asian refining and trading sources, the state-owned oil giant, Aramco, is expected to decrease its official selling price (OSP) for the Arab Light grade between $1.80 and $2 per barrel relative to Middle Eastern benchmarks.
In May, the price for Arab Light may be set at a premium of $1.50 to $1.70 over the Oman/Dubai average, which serves as the pricing benchmark for Middle Eastern crude in Asia. For reference, the Arab Light price for April was set at $3.50 over the Oman/Dubai average following a $0.40 per barrel reduction earlier this month for Asian customers.
The anticipated adjustments for May highlight a broader trend of steep reductions due to declines in international and Middle Eastern benchmarks observed in recent weeks. The survey also indicated an expected larger cut for Arab Extra Light, which could decrease by $1.95 per barrel to a premium of $1.35 over Oman/Dubai.
Saudi Arabia typically reveals its crude pricing around the fifth day of each month and refrains from commenting on price fluctuations. Moreover, the changes will influence other major Middle Eastern oil producers’ pricing strategies for Asia.
The anticipated cuts in prices for Asian clients coincide with OPEC+ increasing oil supply to the market starting in April. This reduction is partly a response to declining Middle Eastern benchmark prices as Russian oil is regaining traction in key Asian markets, particularly China and India, following the initial uncertainties stemming from U.S. sanctions on Russian oil trade in January.
In summary, Saudi Arabia is set to lower oil prices for shipments to Asia, marking a notable decline amid falling regional benchmarks. The adjustments reflect market dynamics, including increased supply from OPEC+ and shifting demand patterns as Russian oil regains Asian customers. Such developments emphasize the competitive nature of the oil market and Saudi Arabia’s influence in pricing strategies.
Original Source: oilprice.com
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