Saudi Arabia has cut its official crude oil selling price for Asian buyers following the latest price rise spurred by the OPEC+ decision to stick to monthly additions of 400,000 bpd in total rather than boosting output more to cap international prices.
Bloomberg reports that Aramco had cut the prices for all grades for its biggest market, with Arab Light now selling for $0.40 per barrel less, for a total price of $1.30 above the Dubai benchmark.
It is the lowest premium since March.
The Kingdom also cut the prices for most of its oil shipments to the Mediterranean Northwest Europe and the United States.
Earlier this week, Aramco's chief executive Amin Nasser said the global gas crunch had boosted oil demand by half a million barrels daily. Nasser also said he expected oil demand to reach 99 million bpd by the end of this year and rise further to top 100 million bpd in 2022. This appears to have strengthened Aramco's resolve to boost its maximum sustained production capacity to 13 million bpd.
"Our maximum sustained capacity from 12 to 13 million (bpd)... is not going to come to full capacity at 13 million bpd until 2027," Nasser said, however, as quoted by Reuters, during an energy conference.
With the demand outlook so bright and prices so favorable, it makes sense for the world's top exporter of oil to give buyers a little break and lower prices. Bloomberg notes that Asia accounts for as much as 60 percent of Aramco's oil exports.
International crude oil prices, meanwhile, continue strong. At the time of writing, Brent crude was trading above $82 per barrel, with West Texas Intermediate climbing closer to $79 per barrel. The trend reflects the shift from gas to oil for some power plants as gas becomes prohibitively expensive.
By Irina Slav for Oilprice.com
More Top Reads from Oilprice.com:
- WTI Crude Oil Price Hits 7-Year High
- The Real Reason OPEC+ Refused To Boost Production Further
- Natural Gas Stocks To Watch As The Energy Crisis Goes Global
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London