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U.S. Oil Rig Count Slips Again

U.S. Oil Rig Count Slips Again

The total number of total…

Saudi Arabia May Cut Oil Prices To Asia Even Further

Saudi Arabia could reduce the official selling price for its flagship Arab Light crude further for Asian buyers, Reuters has reported, citing four analysts it surveyed. The discount will be for Asian purchases.

Aramco already cut the price of its Arab Light for Asian buyers to the lowest in 10 months for shipments taking place this month. The price was set at a $3.25 premium to the Dubai/Oman benchmark, a cut by $2.20 per barrel from the prior month’s price.

Now, according to the four analysts surveyed by Reuters, Aramco could cut the price of Arab Light by another $1.50 per barrel for February shipments. This would bring the premium over Dubai/Oman to just $1.75 per barrel.


"The near-term market outlook is dim. More Russian barrels are expected to flow to Asia, but demand is not picking up," one of the Reuters survey respondents said.

Asia has become the primary destination for Russian oil barrels amid an import embargo from the EU and import bans on Russian crude from the UK and the U.S. Yet Asia is also the biggest market for Saudi oil, although Europe is now turning to Middle Eastern producers to replace Russian barrels.


Demand from Asia was expected to pick up with China’s post-Covid reopening but these expectations may have been overly optimistic. Any pickup in demand would take a bit more than a few days in all likelihood.

At the same time, there are signals such a pickup is on the cards: the first batch of fuel export quotas issued by Beijing earlier this week was almost 50 percent higher than the first batch for 2022, which suggests an uptick in crude imports.

The total volume of fuels under the quota is 18.99 million tons of gasoline, diesel, and jet fuel. The higher exports would likely be directed to the European Union where on February 5 the embargo on Russian fuels will come into effect.

By Charles Kennedy for Oilprice.com

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