Saudi Aramco has cut the price of Arab Light for the U.S. market further for February despite shipping record-low amounts to its biggest customer. U.S. refiners will receive Arab Light for US$0.10 less a barrel, at just US$0.90 above the benchmark for the Gulf Coast.
This is the second monthly price cut of Saudi oil for the United States. In comparison, last month the Saudis said they would raise the official selling prices (OSPs) for Asian customers for January, on the back of a stronger Dubai benchmark and solid demand, generally in line with traders’ expectations.
Saudi exports to the U.S. have been falling more or less steadily since August 2016, hitting a low of 415,000 bpd in the week to October 27, according to data from the Energy Information Administration. The reduction is part of the Kingdom’s efforts to help reduce global supply to a level that would support higher oil prices for longer.
In early December, also as part of this plan, Energy Minister Khalid al-Falih said that Saudi Arabia would cut its crude oil exports to Asia by more than 100,000 bpd in January compared to December, while keeping its shipments to Europe and the U.S. at the December levels, which were 10 percent lower than what Aramco exported to the U.S. in November. Related: Strong Draw In Crude Inventories Lifts Oil Prices
For December, the Saudis had cut total crude oil exports by 120,000 bpd from just above 7 million bpd in November. Still, overall global crude oil shipments will be kept at 6.9 million bpd in January, an industry source familiar with the Saudi plans told Reuters in December.
Saudi Arabia continues to be the poster boy for the OPEC production cut deal, still shouldering most of the burden to compensate for members lagging behind in their compliance with the cuts, such as Iraq. December was no exception, with daily shipments of oil falling to 6.6 million bpd, according to tanker tracking data cited by Bloomberg. That’s down from 7.18 million bpd in November.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
- What Is Keeping Oil From Breaking $70?
- Can Blockchain Bring An End To Corruption?
- Is A “Geopolitical Recession” Looming?