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Saudi Arabia has raised the official selling price (OSP) for Arab light for Asia by $0.45/bbl m/m to $3.00/bbl for July, following the June 4 announcement that OPEC+ would extend production cuts until 2024, with the Saudis reducing output by 1 million bpd in July.
Saudi Arabia has set its July Arab Light Crude Oil OSP to Northwest Europe at +$3.00/bbl to the Ice Brent Settlement, with July Arab Light Crude Oil OSP to the U.S. at +$7.15/bbl versus the ASCI.
On Sunday, the OPEC+ producers decided to keep the current cuts until the end of 2024, while Saudi Arabia, OPEC’s top producer, said it would voluntarily reduce its production by 1 million bpd in July, to around 9 million bpd.
OPEC member UAE was allowed to actually increase its output by around 200,000 bpd, while several others got their production quotas adjusted. These were countries that consistently failed to reach their assigned quotas for various reasons, such as Nigeria and Angola.
Oil prices responded with a $2 spike after the announcement, and Brent crude was trading up 1.34% on Monday at 11:51 EST.
While Saudi Arabia has consistently said it does not make production decisions based on the cost of crude oil, the June 4 decision is overwhelmingly considered to be a move to increase oil prices amid global economic uncertainty as well as concerns about potentially weakening of global demand.
Saudi Arabia has cut the price of the oil it sells to Asian buyers several times since the start of the year to secure market share in a region that has become the largest importer of Russian crude.
In April, Aramco cut the price of Arab Light by $0.25 per barrel on a monthly basis, bringing it to a $2.55 premium to the Dubai/Oman spread per barrel.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com