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Saudi Arabia Reduces Oil Prices | ASHARQ AL-AWSAT English Archive 2005 -2017
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Saudi Arabia Reduces Oil Prices. Reuters

Khobar-Saudi Aramco announced on Thursday the list of new prices for August as it will cut all official selling prices for its crude sales to Asian and U.S. clients.

State-owned Saudi Arabian Oil Co. lowered its official selling price for Arab Light crude to Asia by 40 cents to a premium of 20 cents a barrel above a regional benchmark.

Saudi Arabia’s move to lower the official selling price (OSP) will intensify competition with rivals such as Russia and the United Arab Emirates, who produce similar oil grades and are also looking for a bigger share of the market in Asia, the world’s top oil consuming region.

Saudi official selling price could hurt rival light grades like U.A.E.’s Murban during what is expected to be a season for weak demand in Asia as several refineries shut for maintenance in the third quarter.

Already, a near doubling of Asia’s crude benchmark Dubai from the first quarter has hit refining margins.

On the other hand, Saudi Arabia will supply more Arab Extra Light crude to at least two buyers in Asia in July, four sources familiar with the matter told Reuters on Thursday, as the top oil exporter ramps up shipments in a bid to claim a bigger share of the Asian market.

Saudi Arabia has traditionally accounted for most of the crude imports by Asia, the world’s biggest oil consuming region, but recently its position has been challenged with Russia overtaking it as China’s top supplier in the past three months.

The kingdom, however, has responded by pumping and shipping more following an oilfield expansion, a move that traders say could pressure rival producers – such as the United Arab Emirates (U.A.E.) and Russia – and knock down prices in Asia.

In fact, state oil giant Saudi Aramco has already found buyers for its additional output in July, with some customers in Asia lifting 10 percent more than contracted volumes, the sources told Reuters on Thursday.

The OPEC kingpin kept the official selling price (OSP) for Arab Extra Light unchanged in July, contrary to expectations for a hike, to accommodate a 33 percent rise in output from an expansion at the Shaybah oilfield.

“They are really pushing hard,” a trader with a North Asian refiner said.

“UAE would be most affected if Saudi boosted sales,” a second Asian crude buyer said.

Murban cargoes loading in August sold at discounts against their OSP, while ESPO premiums were mostly below $2 a barrel against Dubai quotes, the lowest in at least eight months.