Saudi Arabia Cuts Oil Prices for Asia in July

Saudi Arabia has cut its official selling price for flagship Arab Light for delivery to Asia, Reuters reports, citing a company document.

The price cut is half a dollar per barrel from June prices, the document showed, giving Arab Light’s OSP for Asian buyers a $2.40 premium over the Dubai/Oman benchmark.

Prices for other Saudi oil grades sold in Asia were also cut, by between $0.40 and $0.60 per barrel, the report also said.

At the same time, however, Aramco hiked the price of the crude it sells to Europe. The official selling price for Arab Light for delivery to Northwestern Europe in July will be $3.10 per barrel above the ICE Brent benchmark. That’s up by $1 per barrel from June.

For the United States, the price of the flagship Saudi grade was kept at a premium of $4.75 over barrel over the Argus Sour Crude Index benchmark. The prices for all other grades the Saudis sell in the U.S. were also kept unchanged from the current month.

The price cuts suggest Saudi Arabia is focusing on market share rather than price, even after international benchmarks slid following the latest OPEC+ meeting. That meeting served market players a surprise with the announcement that some oil supply could be brought back in the second half of the year should market conditions support such a move. Saudi Arabia, however, plans to keep its production cuts in place into next year as well.

In the last few months, Aramco has been raising the official selling prices of its crude for Asia, suggesting healthy demand despite higher prices. This has, in turn, served to prop up international prices. The news that the company is now cutting its oil prices for Asian buyers, who constitute the bulk of its client base, may have the reverse effect on benchmarks. Asia accounts for 82% of Saudi Arabia’s crude oil exports.

By Charles Kennedy for Oilprice.com

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