Saudi Arabia’s state oil company has assured several buyers in Asia it will deliver full contracted volumes in December despite the OPEC+ decision to cut production, Reuters has reported, citing unnamed sources.
The assurance comes despite a commitment on the part of the Kingdom to reduce its production to contribute to the group-wide cut of some 1 million barrels daily, which was agreed at the latest meeting of OPEC+.
"People are scratching their heads to figure out when will the output cut be materialised, as the market has not felt a tightened supply," one of the Reuters sources told the news agency.
At the same time, Saudi Arabia said earlier this month it would lower its official selling price for oil for Asian buyers, again for December deliveries. The price cut was deeper than traders and refiners had expected, per a Bloomberg survey.
Yet the final price remains considerably higher than it has been in previous years, with Arab Light at $5.45 per barrel above the Dubai/Oman benchmark.
At the same time, the Saudis raised the price of the oil they will be selling to Europe in December, even though that continent is no less threatened by a recession than Asia. Prices for the United States remained unchanged.
For Europe, Arab Light for December delivery would cost $1.70 over Brent, Reuters reported, and the Extra Light blend would cost $3.40 over Brent, with the price increase at $0.80 and $0.70, respectively.
Another of Reuters’ sources suggested that the price cut “could indicate that Saudi wants to maintain its market share in Asia in December when the price cap on Russian crude kicks in."
The EU embargo on Russian crude comes into effect on December 5 and the G7 price cap is also slated to kick in around the same time.
By Irina Slav 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.