Saudi Aramco has reduced its oil export prices for the first time in four months amid Covid lockdowns in China that are spurring concern about demand stability.
According to a Bloomberg report, Aramco cut the price for its Super Light for Asia by more than $5 per barrel and the price for its Extra Light by $4.95 per barrel for June deliveries.
Crude oil prices for Europe were reduced more moderately by the Saudi state giant, by between $2 and $3 per barrel, Bloomberg also reported. Prices for exports to the United States remained unchanged from May.
The price cuts follow several hikes that brought Saudi crude prices to a record high earlier this year amid soaring international prices driven by supply tightness and the war in Ukraine.
China's latest series of lockdowns has had the whole business world worried about the future. In Europe, close to 60 percent of businesses with a presence in China were cutting their 2022 growth projections, with more than half of the cuts at between 6 and 15 percent, CNBC reported last week.
Business sentiment among Chinese businesses also suffered from the lockdowns, according to local surveys.
Currently, the effect of the lockdowns on China's oil demand is pretty much the only bearish factor for oil. Tight global supply, the war in Ukraine, and OPEC's unwillingness-and inability-to boost production significantly have joined forces to maintain benchmarks well above $100 per barrel.
Saudi Arabia is playing a vital role in keeping prices high because it is, along with the UAE, the only member of OPEC that has the actual capacity to boost production. However, it has signaled that it has no intention of boosting production beyond what has already been agreed, even as the global oil supply situation worsens because of Western sanctions on Russia.
By Charles Kennedy for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More